Weston (Trustee) v Sanna

Background 2 This proceeding has a long history. While I do not to propose to set that history out in full, it is relevant to note, at least, the following events: (1) on 24 January 2019, I delivered judgment in this matter and made orders, among others, requiring the parties to provide draft short minutes of order giving effect to the Court's reasons delivered on that date and, if required, a proposed timetable for the second stage of the proceeding: see Weston (Trustee) v Sanna [2019] FCA 32. If the parties were unable to agree a form of draft short minutes, they were each to provide their competing form of draft orders, together with short submissions; (2) as the parties were able to agree a form of orders giving effect to the Court's reasons, on 21 March 2019 orders were made by consent between the applicant, Paul Gerard Weston as trustee of the bankrupt estate of Lepa Sanna (Trustee), and Mr Sanna as respondent. Those orders included a declaration pursuant to s 121(1) of the Bankruptcy Act 1966 (Cth) that the transfer by Lepa Sanna to Mr Sanna of the Copacabana Property is void against the Trustee and an order that within 21 days of the date of those orders, Mr Sanna was to execute all such instruments and do all such acts and things as are necessary (including executing a transfer in registrable form) to cause title to the Copacabana Property to be conveyed to the Trustee. Those orders also required the matter to come back before me for case management on a later date so that the remaining aspects of the matter could proceed to hearing. At that stage, that concerned a claim by Mr Sanna to have an interest in the Copacabana Property and a second property which is the subject of the proceeding, which I will refer to as the Green Valley Property; (3) since that time, the matter has continued before me with a number of case management hearings, the result of which has been the joinder of a number of additional parties to the proceeding as respondents. They are parties who had registered caveats on the title of the Copacabana Property and/or the Green Valley Property; (4) on 15 June 2020 (June 2020 Orders), after a contested hearing, I made declarations and orders in relation to the sale of the Copacabana Property and the Green Valley Property: see Weston (Trustee) v Sanna [2020] FCA 830. Relevantly, in relation to the Copacabana Property, I made: (a) a declaration that the Trustee was empowered to offer that property for sale and to sell it by public auction or, alternatively, by private treaty at the best available price; and (b) orders that within 14 days of the date of those orders those parties who had registered a caveat over the title of that property were to withdraw the caveat, that within seven days of the date of those orders Mr Sanna was to deliver to the Trustee any deeds or documents of title in his possession or under his control in relation to the Copacabana Property, that Mr Sanna would be permitted to continue to reside in the Copacabana Property provided he allowed reasonable access to it by the Trustee, that within 14 days of receiving any council rate notices or utilities bills in relation to the property Mr Sanna would pay to the Trustee the amount of that notice or bill, and that Mr Sanna provide the Trustee with vacant possession of the Copacabana Property on or before the earlier of 14 days prior to the completion date of any exchange of contract for its sale or 13 August 2020; (5) as events transpired, Mr Sanna did not provide vacant possession of the Copacabana Property by 13 August 2020, which was the earlier of the two dates specified in the June 2020 Orders. Correspondence about his vacation of those premises was in evidence before me; (6) on 16 September 2020, the proceeding was once again before me. On that date, as Mr Sanna had still not vacated the Copacabana Property, I made an order that the request for enforcement filed by the Trustee on 15 September 2020 in relation to the Copacabana Property be referred to the duty registrar to be dealt with on an expedited basis; and (7) a writ of possession was issued by the Court on 17 September 2020 and that writ is scheduled for execution at midday on 4 November 2020. Both Mr Sanna and the Trustee have been notified that the writ is to be executed at that time.

The evidence 3 In support of his application for a stay of the execution of the writ, Mr Sanna relies on an affidavit sworn by him on 19 October 2020 and an affidavit sworn by Hakki Hassan on 30 October 2020. Mr Hassan is the managing principal of HH Business Consultants and has been assisting Mr Sanna. Mr Hassan appeared today with leave of the Court for Mr Sanna who is not legally represented and was unable to appear. 4 Mr Sanna gives evidence of an offer he has made to purchase, initially, both the Copacabana Property and the Green Valley Property and, subsequently, a revised offer to purchase the Copacabana Property alone. There is evidence before me from the Trustee that the revised offer is not acceptable or, at least, that it cannot be considered unless Mr Sanna is prepared to pay the amounts owing to the caveators, who I note, as ordered by this Court, have removed their caveats from the title of the property, and the caveators are subsequently prepared to provide releases. Mr Sanna has been informed that, in the absence of that occurring, the Trustee intends to proceed with a sale of the Copacabana Property and that he should vacate the property. 5 Mr Sanna also gives evidence of his attempts to secure alternative residential accommodation in the surrounding areas to the Copacabana Property but that he has found it difficult to do so because of the COVID-19 pandemic and the space he requires to store both his personal household effects and his formwork equipment and stock. 6 Finally, Mr Sanna gives evidence of his medical condition. He says that his health has deteriorated significantly and that he now suffers from anxiety, depression and other conditions and that any relocation of his residence will aggravate his pre-existing conditions. Annexed to Mr Sanna's affidavit is a medical certificate from a general practitioner in which that practitioner notes that Mr Sanna is suffering from anxiety disorder and major depression which is affecting his sleep, concentration and appetite. Mr Sanna also annexes a letter from Reliance Psychology Services noting that Mr Sanna has a consultation with a psychologist on 13 January 2021 but has been added to the waitlist for an earlier appointment. There was evidence that Mr Sanna, in fact, seems to have secured an appointment with a psychologist on 30 October 2020 but there was no evidence or report provided of the outcome of that appointment. In his affidavit, Mr Hassan notes that the psychologist was not able to provide a written report following that consultation and prior to this morning's hearing because of his own workload. 7 Mr Hassan also gives evidence of Mr Sanna's continued attempts to source alternate living and storage facilities, but says that such accommodation is not easily accessible to him, and about the role of the Trustee and his solicitors, the fact that the solicitors for the Trustee formerly acted for Australian Executors Limited who was a mortgagee of the Copacabana Property and events related to that matter.

The application for a stay 8 The application for a stay is opposed by the Trustee and other respondents to this proceeding who are actively involved in it, namely, Defined Properties Investments Pty Ltd and Wyse & Young International Pty Ltd (in liquidation). Ms Sanna, who is also a respondent to the proceeding, supports Mr Sanna's application for a stay. The balance of the respondents to the proceeding have not taken an active role in the proceeding since being joined. 9 Mr Sanna makes the following submissions in support of his application for a stay. First, he submits that while his revised offer for purchase of the Copacabana Property has been rejected by the Trustee, he has not given up on the purchase of that property and wishes to pursue that course. Secondly, he submits, that he is not currently in a fit mental state and any attempt to vacate the property will cause further deterioration to his health. Finally, he submits that the solicitors for the Trustee and the Trustee's conduct ought to be investigated and that there are issues of conflict that arise in relation to their role that should be investigated. Mr Hassan, on behalf of Mr Sanna, put to the Court that he could not believe that the Court had permitted this matter to get to this stage given the failure by, it seems, the Trustee to disclose an alleged conflict.

Legal principles 10 The power of the Court to issue a stay in the present circumstances is found in r 41.11 of the Federal Court Rules 2011 (Cth). That rule provides that: A party may apply to the court for a stay or execution of a judgment or order. 11 I was not taken to any authority during the course of argument. Based on the authorities that I have identified, it is apparent that the Court's discretion to order a stay in these circumstances is limited. A stay can be ordered, and has been ordered, where there may be a need to preserve the subject matter of litigation pending an appeal or an application for special leave to the High Court of Australia or otherwise to ensure that any right to appeal is not rendered nugatory, for example, where execution would deprive an appellant of the means of prosecuting an appeal or where the refusal of a stay would make it difficult for an appellate court in the determination of the appeal to grant the relief sought: see Carter v Geoff Layton and Co Pty Ltd (1993) 43 FCR 392 at 393-394. 12 Another circumstance in which the Court might order a stay is in reliance on what has been described as "considerations of practical necessity": see Endormer Pty Ltd (in liq) v Australian Guarantee Corporation Ltd [2001] FCA 15 at [21]. In that case, Lindgren J granted a stay of the execution of a writ of possession for a short period of seven days. However, his Honour did not do so on the various grounds relied on by the applicant for a stay but because of considerations of practical necessity, including the time it would take to vacate the subject property.

Consideration 13 Having considered the submissions made by the parties, this is not a case where I would exercise my discretion to grant a stay of the execution of the writ of possession. My reasons for reaching that conclusion follow. 14 First, this proceeding has, as summarised above, had a long history. Mr Sanna has been on notice of the orders that the Copacabana Property be transferred to the Trustee and of its impending sale since March 2019. Despite those orders, he has continued to occupy the Copacabana Property. In June 2020 orders were made to facilitate the sale of the Copacabana Property and Mr Sanna's vacation of that property. On the basis of those orders, Mr Sanna had some seven weeks to arrange his affairs and vacate the property. That did not occur and, ultimately, the Trustee was required to apply for a writ of possession which he did, with the writ issuing on 17 September 2020. It is now November 2020 and the writ is due to be executed in two days. 15 I accept that the prospect of having to vacate the Copacabana Property, which, it seems, has been Mr Sanna's home for some time, would cause distress and concern. However, there is no evidence before me one way or the other as to how a stay would assist Mr Sanna and how it might ameliorate his current condition. 16 On the present application, a stay of approximately two months is sought. That, on one view, may simply put off the inevitable, that is, the requirement that Mr Sanna vacate. It may also be difficult for Mr Sanna to obtain accommodation. But the evidence before me relied on by the Trustee indicated that there were vacant properties available for lease in areas relatively close to, or close to, the Copacabana Property. Again, Mr Sanna has had months, if not years, to arrange his affairs in this regard. 17 Secondly, while Mr Sanna has remained in occupation of the Copacabana Property, the amount secured against it as a result of a loan from Westpac Banking Corporation (Westpac Loan) continues to increase. Mr Sanna has not been paying any fees for his continued occupation of the Copacabana Property nor has he been servicing that loan. The evidence before me showed that the last payment made on the Westpac Loan was on 16 May 2019. That is, there has been no payment made for approximately 18 months. In that time, the amount of the Westpac Loan has increased by approximately $60,000. That is not in the interests of any party and, in particular, not in the interests of the creditors and the caveators, including the caveators who are now respondents to this proceeding. 18 Thirdly, there is no evidence before me of any further revised offer to purchase the Copacabana Property from the Trustee. The revised offer was addressed by the Trustee in the way referred to at [4] above. In that regard, the Trustee submitted, and I accept, that given his role and the fact that the caveators will seek to participate in the proceeding in order to obtain a share of any proceeds of sale, he needs to exercise some caution in the sale process he pursues in order to achieve the best possible outcome. That may mean a sale by way of auction or private treaty, but at an appropriate amount based on advice received by the Trustee. 19 Fourthly, there is no appeal from the orders made by the Court in March 2019. Mr Sanna did not seek to appeal the orders at that time nor has he sought to appeal them subsequently. To the extent that complaints are made about matters relating to an alleged conflict of interest on the part of the Trustee or his lawyers, they are not matters which are, in my view, relevant to this application and, to the extent they might otherwise be raised, this application is not the forum in which they can be raised or ventilated. 20 Finally, the evidence before me does not indicate or assist me in determining how a stay of the execution of the writ of possession would result in any different outcome for Mr Sanna. As I have already indicated, there is no evidence of any further revised offer to the Trustee for purchase of the Copacabana Property that the Trustee is considering; there is no evidence that a short adjournment would alleviate the current practical problems Mr Sanna is facing in finding alternative accommodation; and there is no evidence that a stay of approximately two months would assist Mr Sanna's current medical condition and, if so, how.

Conclusion 21 In all of the circumstances, balancing the interests of Mr Sanna, the Trustee, the creditors and the caveators, I do not propose to accede to Mr Sanna's application for a stay of the execution of the writ of possession. 22 I will make an order dismissing Mr Sanna's interim application filed on 27 October 2020 and an order that Mr Sanna pay the costs of that application of the parties participating in today's hearing. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic.

SCHEDULE OF PARTIES NSD 276 of 2016 Respondents Fourth Respondent: BARRIE NORTHCOTE HORNE Fifth Respondent: WESTPAC BANKING CORPORATION Sixth Respondent: HANSON CONSTRUCTION MATERIALS PTY LTD Seventh Respondent: MS LEPA SANNA Eighth Respondent: MR MICHAEL KEVIN DEAKIN Ninth Respondent: BLUESCOPE STEEL LTD Tenth Respondent: DEFINED PROPERTIES INVESTMENTS PTY LTD Eleventh Respondent: WYSE & YOUNG INTERNATIONAL PTY LTD (IN LIQ) Twelfth Respondent: BORAL LIMITED