CATCHWORDS

BANKRUPTCY:   Trustee's application for possession of property - period of time to be allowed - relevance of delay prior to date of order - relevance of family circumstances.

Bankruptcy Act, 1966 (Cth)

THOMAS WILLIAM FREDERICK DIXON v LY TY TRAN CAO & ORS

No. W423 of 1991

THOMAS WILLIAM FREDERICK DIXON v VAN LAM CAO & ORS

No. W424 of 1991

Beazley J

23 June 1995

Sydney

IN THE FEDERAL COURT OF AUSTRALIA )

                                  )  No. W423 of 1991

NEW SOUTH WALES DISTRICT REGISTRY )     No. W424 of 1991

                                  )

BANKRUPTCY DIVISION               )

                   RE:       LY TY TRAN CAO

                                  Bankrupt

                   EX PARTE:THOMAS WILLIAM FREDERICK

                             DIXON

                                  Applicant

                             LY TY TRAN CAO

                                  First Respondent

                             THANH PHUONG CAO

                                  Second Respondent

                             THANH PHU CAO

                                  Third Respondent

                   AND:

                   RE:       VAN LAM CAO

                                  Bankrupt

                   EX PARTE:THOMAS WILLIAM FREDERICK

                             DIXON

                                  Applicant

                             LY TY TRAN CAO

                                  First Respondent

                             THANH PHUONG CAO

                                  Second Respondent

                             THANH PHU CAO

                                  Third Respondent

CORAM:    BEAZLEY J

PLACE:    SYDNEY

DATE:     23 June 1995

                   SHORT MINUTES OF ORDER

The Court orders that:

1.   Judgment be entered for the applicant for possession of the land referred to in the Schedule hereto.

                             2.

2.   Leave be granted to the applicant to issue a Writ in the nature of a Writ of Possession.

3.   That issue of the Writ of Possession aforesaid be postponed until 2 September 1995.

4.   The third respondent pay the applicant's costs.

5.   Liberty to apply on 2 days notice.

                          SCHEDULE

     The land in Folio Identifier 1/707753 known as 38A Mosely Street, Strathfield in the State of New South Wales."

IN THE FEDERAL COURT OF AUSTRALIA )

                                  )  No. W423 of 1991

NEW SOUTH WALES DISTRICT REGISTRY )     No. W424 of 1991

                                  )

BANKRUPTCY DIVISION               )

                   RE:       LY TY TRAN CAO

                                  Bankrupt

                   EX PARTE:THOMAS WILLIAM FREDERICK

                             DIXON

                                  Applicant

                             LY TY TRAN CAO

                                  First Respondent

                             THANH PHUONG CAO

                                  Second Respondent

                             THANH PHU CAO

                                  Third Respondent

                   AND:

                   RE:       VAN LAM CAO

                                  Bankrupt

                   EX PARTE:THOMAS WILLIAM FREDERICK

                             DIXON

                                  Applicant

                             LY TY TRAN CAO

                                  First Respondent

                             THANH PHUONG CAO

                                  Second Respondent

                             THANH PHU CAO

                                  Third Respondent

CORAM:    BEAZLEY J

PLACE:    SYDNEY

DATE:     23 June 1995

                    REASONS FOR JUDGMENT

BEAZLEY J:    There are 3 applications before the Court.  Two
of the applications are in identical form save for the identity of the first respondent.  In proceedings NB 423 of 1991, Ly Ty Tran Cao is the first respondent.  In proceedings NB 424 of 1991, Van Lam Cao is the first respondent.  Those applications are made by the trustee of the estates of Ly Ty Tran Cao and Van Lam Cao, seeking an order for possession of residential property situated at 38A Mosely Street, Strathfield, NSW, being the property in Folio Identifier 1/707753 (the property).  The second application is by Gregory Eugene Smith and Andrew Pasternacki, the solicitors for the third respondents, seeking an order that, for the purposes of their application only, they be joined as parties to the proceedings, and further seeking a declaration that they hold a retaining lien in respect of Folio Identifier 1/717753.  They seek a further order that Folio Identifier 1/717753 remain in the custody of a deputy registrar of this court until further order.  The Folio Identifier is currently in possession of a deputy registrar of the court pursuant to an order made by me on 14 March 1993.

These reasons for judgment deal with the trustee's application for possession only.

Background

On 26 February 1991, sequestration orders were made against the estates of Ly Ty Tran Cao and Van Lam Cao (the bankrupts).  Ly Ty Tran Cao had committed an act of bankruptcy on 17 April 1990.  Van Lam Cao had committed an act of bankruptcy on 7 May 1990.  Mr and Mrs Cao became bankrupt upon the petition of the Deputy of Taxation.  The Cao's were subject to an examination under s81 of the Bankruptcy Act 1991.  On 9 August 1993, the trustee made application to the court in each estate for a declaration that the property belonged to the trustee as trustee of the estate of each bankrupt.  In the case of Ly Ty Tran Cao, the declaration was in respect of 13% of the property.  In the case of Van Lam Cao the declaration was in respect of 87%.  

On 19 August 1994, Davies J made the following declaration in proceedings No. 423 of 1991:

     "1.  DECLARE that the land referred to in the Schedule hereto as to 13% thereof belongs to the Applicant as trustee of the estate of the First Respondent.

     2.   ORDER that the Second and Third Respondents, within 21 days after service upon time of an office copy of this Order, transfer 87% of their respective estates or interests in the land to the Applicant as trustee of the estate of the First Respondent.

     3.   ORDER that the Second and Third Respondents pay the Applicant's costs of these proceedings.

     THE COURT BY CONSENT makes the following further orders:-

     4.   Upon the Second and Third Respondents:-

          (a)  within 21 days from the date of this order filing and serving a Notice of appeal from orders 1, 2 and 3;  and

          (b)  by their Counsel, undertaking to the Court:-

              (i)  to prosecute any such appeal with reasonable diligence;  and

              (ii)not to dispose of or deal with the land in any manner whatsoever (including, without limiting the generality of the foregoing, offering the land as security for any loan or encumbering the land in any way).

          ORDER that execution upon orders 1, 2 and 3 be stayed pending determination of any such appeal or until further order.

     5.   GRANT liberty to apply upon three days' notice.

                          SCHEDULE

     The land in Folio Identifier 1/707753 known as 38A Mosely Street, Strathfield in the State of New South Wales."

His Honour made a complementary declaration and orders in proceedings No. 424 of 1991 in respect of the other 87% of the property.

The bankrupts and the respondents appealed against the orders of Davies J.  However, the matter did not proceed before the Full Court.  By that time, the second respondent Thanh Phuong Cao was bankrupt.  On 21 February 1991, when the matter was listed for hearing, the second respondent's trustee appeared and informed the court that it was not intended to prosecute the appeal.  Counsel for the third respondent, Thanh Phu Cao, also informed the court that his client did not intend to prosecute the appeal.  The Full Court of the Federal Court made orders against the third respondent dismissing the appeal and ordering him to pay the trustee's costs of the appeal.

Thereafter, the matter came before me on 14 March 1995, pursuant to the trustee's application for an order that the second and third respondents deliver to the solicitors for the trustee a duly executed memorandum of transfer of their respective interests in the property.  That application was necessary because the second and third respondents had refused to execute a memorandum of transfer.  Their reasons for doing so, were, as stated by their counsel

     "that the property in question is the house in which the whole of the family lives.  There are half a dozen sisters, brothers and the parents.  The father is now in Vietnam temporarily but they live there as well and as do the second and third respondents.   And [the third respondent] has instructed me to say this to the court: that with great regret and with great respect he feels that an injustice has been done which was that the trustee in Bankruptcy, Mr Dixon, the applicant in these proceedings, obtained orders in respect of the property as a result of an assessment for income tax which was a default assessment which was erroneous.

     Now, of course, we have explained that the remedies in respect of that assessment were available many years ago and ought to have been pursued, they were not, but your Honour perhaps if I can say this respectfully, may have some feeling for the difficulties which we have encountered."

Counsel for the third respondent advised the court that his client would not resist an order that a registrar execute the memorandum of transfer, as in that case: 

     "he will not feel that he has been instrumental in effectively signing over the family home.

Accordingly, on 14 March 1995 I made order an order that a deputy registrar execute the memorandum of transfer so as to  accommodate the matters raised on behalf of the third respondent. 

The respondents have also refused to consent to an order that they vacate the property.  The reasons for doing so were similar to those that had been raised in respect of the refusal to sign a memorandum of transfer.  I should however deal with those reasons a little more fully, as they also seek a time to vacate which is more extensive than that to which the trustee is prepared to accede. 

The property has, since its purchase in January 1986, been the Cao family home.  Presently, the property is occupied by 8 members of the family, five of whom are unemployed.  In his affidavit filed 10 April 1995, Thanh Phuong Cao stated that the family does not understand how they are in a position of having "to leave the house forever".  He again referred to the fact that family considers a great injustice has been done to them as a result of a wrong tax assessment made in 1988.  The members of the family living in the house have no savings.  Only one of them, Thanh Phu Cao, is in employment, as a fabric cutter.  One is a university student and another is in Year 11 in high school.  The father is very ill.  The 6 sisters in the family are married and live with their own families.  Thanh Phuong Cao gave evidence that the family will not be able to
buy or rent another house and will have to be accommodated by the married sisters.

The trustee submitted that the family has had a lengthy period of time to vacate, commencing from the date of Davies J's orders on 19 August 1994.  It was submitted that having regard to the delay since that time, a short period only should be allowed before they should be required to vacate.

Although the trustee has been inconvenienced in having to come to the court to obtain orders, both in relation to the signing of a memorandum of transfer and for possession of the property, I do not consider that the family's attitude  exhibits any defiance of the court.  Rather, there appears to be strong financial reasons and a sense of bewilderment of their fate which they do not appear to have come to grips with.

Whilst the trustee has an obligation to administer the estate of the bankrupts, no particular prejudice was advanced as to why orders ought to be made to take effect with any immediacy.  The house is unencumbered.  Any statutory charges associated with the property will be readily met out of the proceeds of sale.

In the circumstances, I am of the opinion that a reasonable

time ought to be allowed to the family to vacate, notwithstanding the lengthy delay which has occurred to date.  I consider that a period in the order of 2 months is appropriate.  I propose to order therefore that vacant possession be given by 1 September 1995.

I certify that this and the preceding 7 pages

are a true copy of the Reasons for Judgment

of the Honourable Justice Beazley.

Associate:

Dated:    23 June 1995

                         APPEARANCES

Counsel for the Applicant:            Mr Gibb

Solicitors for the Applicant:              MAURICE FREIDMAN &

                                      COMPANY

Counsel for the 3rd Respondent:       Mr Podleska

Solicitors for the 3rd Respondent:         SMITH & PASTERNACKI

Dates of hearing:                     14 March, 10 April

                                       1995