FEDERAL COURT OF AUSTRALIA

Commonwealth Bank of Australia v Collins (as trustee of the bankrupt estate of Campbell) [2014] FCA 1061

THE COURT ORDERS THAT:

1.    To the extent that such leave is required, pursuant to section 58(3)(b) of the Bankruptcy Act 1966 (Cth) leave be granted to the applicant as and from 4 April 2013 to commence and take fresh steps in and continue with Supreme Court of New South Wales Common Law Division proceeding number 185361 of 2012 against Gregory William Campbell and Jennifer Ivy Campbell to the extent necessary to maintain its claim for possession of the properties at 15 Mitchell St, Norah Head and 34 Clark Road, Noraville and to obtain writs of possession therefor and to execute the same.

2.    It is a condition of leave being granted herein that the applicant not take any step to enforce any money judgment or order made in the Supreme Court proceeding without the further leave of this Court.

3.    The parties have liberty to apply to the Court on 3 days’ notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Revised from transcript)

1    This is an application by the Commonwealth Bank of Australia (‘the Bank’) for leave pursuant to s 58(3)(b) of the Bankruptcy Act 1966 (Cth), to continue Supreme Court of New South Wales proceedings number 185361 of 2012 against each of Mr Gregory William Campbell and Mrs Jennifer Ivy Campbell, who are the first and second defendants in those proceedings.

2    The Bank holds a registered mortgage over premises at 15 Mitchell Street, Norah Head and 34 Clark Road, Noraville, both in the State of New South Wales. I shall refer to these as ‘the properties’. Those properties were registered in the names of Mr and Mrs Campbell. In March 2009, the estates of Mr and Mrs Campbell were subject to sequestration orders made in the former Federal Magistrates Court of Australia on account of their bankruptcy. The effect of the making of those sequestration orders was to vest their title to the properties in their trustees in bankruptcy, Mr Gerald Collins and Mr Matthew Joiner.

3    On 17 April 2012, the trustees in bankruptcy obtained a transfer of the title in the properties to Mr Collins. This was the ordinary effect of the operation of s 58 of the Act. After the trustees had obtained a transfer of that title, Mr and Mrs Campbell were, on 7 May 2012, discharged from their bankruptcy by effluxion of time. However, for the reasons summarised by Flick J in Daevys v Official Trustee in Bankruptcy [2011] FCA 398 at [7], the effect of that discharge was not to re-vest property which had, by then, already vested in the trustee in bankruptcy back to Mr and Mrs Campbell.

4    It would appear that neither the Bank, via its mortgage, nor the trustees in bankruptcy, by reason of their legal title, have been successful in obtaining possession of the properties. The Bank has, for some time now, sought to obtain possession of those properties, presumably for the purposes of effectuating an eventual sale pursuant to powers of sale conferred under the Real Property Act 1900 (NSW) s 58. There appear to be people in possession of the properties who are related to Mr and Mrs Campbell and it may be, although I draw no conclusion, that Mr and Mrs Campbell are still in possession of the properties.

5    It does not, however, really matter. The important point is that the Bank wishes to obtain possession. To that end, it has commenced possession proceedings in the Common Law Division of the Supreme Court and the trustees in bankruptcy are co-plaintiffs. The first and second defendants are, as I have said, Mr and Mrs Campbell. It is not entirely clear that that proceeding is a proceeding with respect to a debt provable in the bankruptcy, although it may well be.

6    It is, therefore, not entirely clear that leave is, in fact, necessary. However, as Jacobson J explained in Stoker v Starr [2011] FCA 746 at [13]:

‘Their Honours [in Allanson v Midland Credit Ltd (1977) 16 ALR 43] went on to observe that leave may be granted without determining whether s 58(3) is enlivened. This is because the question of whether leave is required may involve difficult and complex questions of law and fact. It is, as their Honours said, therefore, permissible in an appropriate case to proceed on the basis that leave is necessary rather than to involve the parties in the futile exercise of determining, possibly after a series of appeals whether the need for such leave has arisen: Allanson at 49.’

[citation added]

7    In this case, on any view, if leave is required it should be granted. The Bank is going about the ordinary business of recovering on its securities and I can think of no conceivable reason why leave should not be granted. In particular, having regard to the Court’s supervisory role in relation to protecting the assets of the bankrupt estate against unnecessary waste and dissipation, I can see no risk of waste or dissipation if leave be granted. In those circumstances, I propose to grant leave to proceed under s 58(3)(b) of the Bankruptcy Act.

8    The Bank has formulated a form of order and I make an order in that form as follows:

1.    To the extent that such leave is required, pursuant to section 58(3)(b) of the Bankruptcy Act 1966 (Cth) leave be granted to the applicant as and from 4 April 2013 to commence and take fresh steps in and continue with Supreme Court of New South Wales Common Law Division proceeding number 185361 of 2012 against Gregory William Campbell and Jennifer Ivy Campbell to the extent necessary to maintain its claim for possession of the properties at 15 Mitchell St, Norah Head and 34 Clark Road, Noraville and to obtain writs of possession therefor and to execute the same.

2.    It is a condition of leave being granted herein that the applicant not take any step to enforce any money judgment or order made in the Supreme Court proceeding without the further leave of this Court.

3.    The parties have liberty to apply to the Court on 3 days’ notice.

Associate:

Dated:    2 October 2014