FEDERAL COURT OF AUSTRALIA

Pekar v Holden (Trustee) [2017] FCA 596

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application, filed by the appellant on 18 April 2017, be refused.

2.    The appeal be dismissed.

3.    Paragraphs 2, 3, 4, 5, 9, 10 and 11 of the declarations and orders made by the Federal Circuit Court on 20 January 2017 be set aside.

4.    In lieu thereof it be declared and ordered that:

(2)    The Bankrupt’s interest in the Property vests in the Applicant (the trustee of the bankrupt estate of Mr Fima Pekar).

(3)    The Respondent (Mrs Ida Pekar) and the Bankrupt (Mr Fima Pekar) deliver vacant possession of the Property to the Applicant on or before 30 June 2017. If the Respondent and the Bankrupt fail to comply with this order, a warrant of possession issue forthwith in favour of the Applicant.

(4)    The Respondent and the Bankrupt remove all personal possessions from the Property on or before 30 June 2017. Any personal property remaining at the Property after that date be deemed to have been abandoned and be disposed of in any manner as the Applicant sees fit.

(5)    The Applicant be appointed trustee for the sale of the Property. The Applicant is to have the sole conduct of the sale of the Property and be authorised to instruct an agent and/or an auctioneer for that purpose.

(9)    The costs of the sale be met from the proceeds of the sale.

(10)    The Applicant pay 50% of the proceeds of the sale to the Respondent.

(11)    The remaining proceeds of the sale, less the costs of the sale, vest in the Applicant.

5.    The appellant (Mrs Ida Pekar) pay the costs of the respondent (the trustee of the bankrupt estate of Mr Fima Pekar) of the appeal in this Court and of the proceeding in the Federal Circuit Court.

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

REASONS FOR JUDGMENT

TRACEY J:

1    This is an appeal from a judgment of the Federal Circuit Court of Australia (“the FCC”) in a bankruptcy matter: see Holden in His Capacity as Trustee of the Bankrupt Estate of Pekar v Pekar [2017] FCCA 22. The applicant in the FCC and the respondent in the present proceeding is the trustee of the bankrupt estate of Mr Fima Pekar (“the trustee”). The respondent in the FCC (and the appellant in this Court) is Mrs Ida Pekar, Mr Pekar’s wife.

2    Mr and Mrs Pekar were joint proprietors of a residential property in East St Kilda. On 16 July 2012, Mr Pekar transferred all his right, title and interest in the property to Mrs Pekar. The consideration of the transfer was said to be “desire to make a gift”. Following the transfer, Mrs Pekar became the sole registered proprietor of the property.

3    On 2 October 2014, a Registrar made a sequestration order against the estate of Mr Pekar. The date of the act of bankruptcy was fixed as 25 July 2014. The trustee was appointed one of the trustees of Mr Pekar’s estate upon the making of that order. He was subsequently appointed sole trustee of the bankrupt estate. On 12 February 2015, a judge of the FCC affirmed the order of the Registrar and dismissed Mr Pekar’s application for review: see Pekar v Rickards Legal [2015] FCCA 217.

4    On 30 April 2015, the trustee applied to the FCC for declarations that the transfer was void, either pursuant to s 120 or, alternatively, s 121 of the Bankruptcy Act 1966 (Cth) (“the Act”). Consequential orders for possession and sale were also sought.

5    The FCC made the orders sought by the trustee on 20 January 2017. Mrs Pekar has now appealed from the declarations and orders made by the trial judge.

PROCEDURAL MATTERS

6    On 3 March 2017, I granted a stay of the operation of paragraphs 3 to 8 of the FCC’s orders pending the hearing and determination of the appeal. At the same time, an issue arose as to Mrs Pekar’s legal capacity to prosecute the appeal. Mr Pekar was present in Court and sought to represent Mrs Pekar. Mrs Pekar was not present. Mr Pekar provided, from the bar table, a copy of a letter from Mrs Pekar’s doctor dated 29 September 2015, which stated that attendance at any hearing was likely to cause a “detrimental effect” to Mrs Pekar’s mental illness. He also handed up as a statutory declaration of Mrs Pekar dated 2 March 2017, in which she said that she “authoris[ed]” her husband to act for her in the proceeding. Mr Pekar foreshadowed an application to be made a litigation representative for his wife.

7    Such an application was subsequently filed on 15 March 2017 pursuant to r 9.63(1) of the Federal Court Rules 2011 (Cth) (“the Rules”). It was supported by a short affidavit signed by Mrs Pekar on 9 March 2017, which stated that she had a mental disability and that she consented to Mr Pekar acting for her in the proceeding. No contemporaneous medical evidence was filed to support the claim that Mrs Pekar was “a person under a legal incapacity” for the purposes of the Rules. That phrase is defined in the Dictionary of the Rules to include “a mentally disabled person”, which is in turn defined to mean “a person who, because of a mental disability or illness, is not capable of managing the person’s own affairs in a proceeding”.

8    When the application came on for hearing on 20 March 2017, Mr Pekar was present in the Court, while Mrs Pekar was again absent. In the circumstances, I was not persuaded that it was appropriate for me to appoint Mr Pekar as Mrs Pekar’s litigation representative: cf Dauguet v Centrelink [2015] FCA 1212 at [21]–[22] (Murphy J), citing L v Human Rights and Equal Opportunity Commission (2006) 233 ALR 432 at 438–439; [2006] FCAFC 114 at [26]–[27] (Black CJ, Moore and Finkelstein JJ).

9    A subsequent interlocutory application was filed by Mrs Pekar on 18 April 2017, which appeared to seek default judgment against the respondent because of his alleged failure to comply with orders requiring him to serve a copy of his written submissions on her. That failure, if there had been one, did not warrant summary judgment. The application was, therefore, refused.

10    That application and a directions hearing were listed for hearing on 24 April 2017. Both Mr and Mrs Pekar were present. The trustee had filed written submissions but, as foreshadowed by the application, an issue arose as to whether those submissions had been served. The trustee was not in a position to file an affidavit of service and Mrs Pekar said that she had not received the submissions. The matter was stood down so that a copy of the submissions could be provided to Mrs Pekar and considered by her. When the matter resumed, Mrs Pekar said that she did not understand the submissions but that her husband did. In these circumstances, I gave Mr Pekar leave to make submissions on behalf of his wife.

11    Both Mr Pekar and the solicitor for the trustee advised the Court that they were ready for the matter to proceed as a final hearing. Both parties had filed written submissions and both made oral submissions.

THE LEGISLATION

12    Although the trustee’s application to the FCC relied on both ss 120 and 121 of the Act, the trial judge confined his attention to s 120. Relevantly, that section provides:

120 Undervalued transactions

Transfers that are void against trustee

(1)    A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:

(a)    the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and

(b)    the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property.

…

(3)    Despite subsection (1), a transfer is not void against the trustee if:

(a)    in the case of a transfer to a related entity of the transferor:

(i)    the transfer took place more than 4 years before the commencement of the bankruptcy; and

(ii)    the transferee proves that, at the time of the transfer, the transferor was solvent; or

(b)    in any other case:

(i)    the transfer took place more than 2 years before the commencement of the bankruptcy; and

(ii)    the transferee proves that, at the time of the transfer, the transferor was solvent.

Rebuttable presumption of insolvency

(3A)    For the purposes of subsection (3), a rebuttable presumption arises that the transferor was insolvent at the time of the transfer if it is established that the transferor:

(a)    had not, in respect of that time, kept such books, accounts and records as are usual and proper in relation to the business carried on by the transferor and as sufficiently disclose the transferor’s business transactions and financial position; or

(b)    having kept such books, accounts and records, has not preserved them.

…

What is not consideration

(5)    For the purposes of subsections (1) and (4), the following have no value as consideration:

(a)    the fact that the transferee is related to the transferor;

(b)    if the transferee is the spouse or de facto partner of the transferor—the transferee making a deed in favour of the transferor;

…

(d)    the transferee’s love or affection for the transferor;

…

Meaning of transfer of property and market value

(7)    For the purposes of this section:

(a)    transfer of property includes a payment of money; and

(b)    a person who does something that results in another person becoming the owner of property that did not previously exist is taken to have transferred the property to the other person; and

(c)    the market value of property transferred is its market value at the time of the transfer.

(Emphasis in original.)

The term “related entity” is defined in s 5(1)(a) of the Act to include a relative of the transferor of property. “Property” is also defined in s 5(1). It includes real property. Solvency is dealt with in subsections 5(2) and (3) as follows:

(2)    A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable.

(3)    A person who is not solvent is insolvent.

(Emphasis in original.)

13    Section 58 of the Act provides that, upon a debtor becoming a bankrupt, the property of the bankrupt vests forthwith in his or her trustee, at least in equity. Pursuant to s 58(2), the property will only vest at law upon compliance with any law of the Commonwealth, a State or a Territory that requires the transmission of property to be registered and enables the registration of the trustee as the owner of any such property. Relevantly, s 51 of the Transfer of Land Act 1958 (Vic) requires that a record of the appointment of a trustee in bankruptcy be made in the Register, at which time the trustee becomes the transferee and proprietor of the estate or interest of the bankrupt. There is no evidence before the Court as to whether, subsequent to the FCC’s declaration on 20 January 2017, the trustee has been registered in relation to the property in accordance with s 51.

FEDERAL CIRCUIT COURT’S DECISION

14    The trial judge recorded a number of procedural and factual matters which he did not understand to be in dispute. They included the background facts which have been outlined above in these reasons. He summarised the case advanced by the trustee at [9]:

This aspect of the case can be put quite shortly. The trustee submits that since Ms Pekar is the wife of Mr Pekar, by reason of s 5(1) of the Act she is a related entity of the bankrupt. As the date of the bankruptcy occurred on 25 July 2014 the relation backperiod is deemed to have commenced on that day, and constitutes the period between 25 July 2010 and 25 July 2014. On any view, the transfer occurred within that period, on 16 July 2012. Counsel for the trustee submitted that the terms of s 120 meant that the transfer in July 2012 was void against the trustee.

15    His Honour then identified the primary contention advanced by Mr and Mrs Pekar before him, namely that they had always intended that the property be wholly owned by Mrs Pekar. He noted at [10] that “very little was said that engaged with the terms of s 120 of the Act”.

16    His Honour next explained his reasons for holding that the transfer was void against the trustee pursuant to s 120. He said that:

13.    In this instance there is no question but that the transfer took place within the four-year period prescribed by s 120(3)(a)(i). Accordingly, although this was a matter to which both parties paid attention during the hearing, the solvency of Mr Pekar at the time of the transfer is for these purposes irrelevant.

14.    The only issue required to be provided is that the transfer took place in the period beginning five years before the commencement of the bankruptcy (s 120(1)(a)), a matter not in issue, and that the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property (s 120(1)(b)).

15.    Here the transfer was recorded as being provided with consideration of “desire to make a gift.” There has been no assertion by Mr or Ms Pekar that any monetary consideration of any sort was advanced. There has been no suggestion that any cash passed hands. Furthermore, looked at in substance, it is clear that the consideration for the transfer was for love and affection. On any view, and in any event, a gift involves no consideration.

17    His Honour then turned briefly to consider the consequences of his principal finding. He noted that nothing had been said in any detail about the practical consequences of any order which he might make for possession of the property. He accepted that any order he might make was likely to impose hardship on Mr and Mrs Pekar. He noted that there had been “a very extensive delay” in dealing with the matter and that this had operated to the detriment of the creditors (at [16]). Nonetheless, he said that he was prepared to grant Mr and Mrs Pekar 60 days before the orders for possession took effect.

18    Having regard to the submissions made by the parties, it is necessary to set out in full the declarations and some of orders made by the trial judge. They were:

THE COURT DECLARES THAT:

(1)    The transfer from Fima Pekar (the Bankrupt) to Ida Pekar (the Respondent) of the property recorded in Certificate of Title Volume 9940 Folio 596, being the property known as and situate at Unit 1, 64 Alexandra Street, East St Kilda (“the Property”) dated 16 July 2012, is void against the trustee.

(2)    The Trustee holds one half of the Property on trust for the benefit of the Applicant.

THE COURT ORDERS THAT:

(3)    The Respondent deliver vacant possession of the Property to the Applicants [sic] by 20 March 2017.

(4)    Upon delivering possession of the Property to the Applicants [sic], the Respondent must remove all personal possessions which he [sic] wishes to retain and any personal possessions or personal property remaining at the Property will be deemed to have been abandoned and may be disposed of in any manner that the Applicant sees fit.

(5)    The Applicants [sic] have the sole conduct of the sale of the Property and be authorised to instruct an agent and/or auctioneer for that purpose.

(6)    The Property be sold by public auction with a reserve recommended by the real estate agent conducting the sale.

(7)    In the event that the Property is passed in at auction, it shall be sold by private treaty at a price recommended by the real estate agent conducting the sale.

(8)    The Applicants [sic] be empowered to sign all documents and do all things on behalf of the Respondent as necessary to give effect to the sale.

Further orders were made relating to the filing of submissions on costs and the making of costs orders in chambers, although no such costs orders were made.

19    At the hearing, the solicitor for the trustee conceded that paragraph 2 of the trial judge’s orders was probably otiose and was, in any event, somewhat loosely drawn given the references to “the Trustee” and “the Applicant”, who were one and the same person.

THE APPEAL GROUNDs

20    Mrs Pekar’s notice of appeal contained the following ground of appeal:

The Judge failed to note as [sic] the application breaches sec 120(3A) and sec 120(5) of the Bankruptcy Act 1966 and therefore have [sic] no merits.

21    Mrs Pekar’s written submissions were somewhat difficult to comprehend. They suggested two grounds of appeal. These were that the trial judge had erred in law:

    by holding that the solvency of Mr Pekar at the time of the transfer of his interest in the property was irrelevant; and

    in dealing with the question of whether there was consideration for the transfer within the meaning of s 120 of the Act.

22    In oral submissions on his wife’s behalf, Mr Pekar sought to explain why it was that the trial judge had erred in dealing with the trustee’s application. He argued that he had not transferred any “property”. Rather, he had transferred “part of the property” as a gift to his wife. In her written submissions, Mrs Pekar argued that sections 58 and 120 of the Act applied only to “the whole property” and not “a share in property”. Mr Pekar further argued that there was nothing in s 120 “which says … [that] a gift has no value for consideration”. He stressed that the transfer had been made at a time when he was solvent.

23    When developing his argument in relation to solvency, Mr Pekar placed considerable emphasis on the provisions of s 120(3A) of the Act. He submitted that:

And most important — most important — section 120 subsection (3A) it clearly says for the purpose of section (c) a rebuttable presumption arises as the transferor at the time of the transfer was or was about to become insolvent. That is not the case with me. I was solvent then. I am solvent now. That is — but the main point — the main point — the trustee must establish before the court as at the moment the transfer took place I was insolvent.

24    Mr Pekar also advanced a rather peculiar submission which, as I understood it, was founded on s 120(7)(b). He said that:

And I will point you out back to section 120 section (7). It says clearly someone who does something like that which result[s] in another person to become [sic] an owner of the property who previously did not exist — it is a very important point — who previously did not exist to be taking … of the property. That has nothing to do with my wife. She always held the share in the property. She was always on the title of the property.

CONSIDERATION

25    It would appear that the arguments advanced by Mr Pekar before the trial judge differed markedly from those raised on the present application. On this occasion, Mr Pekar has paid far more attention to the construction and application of s 120 of the Act. The construction arguments which he put most forcefully are, however, mistaken.

26    Each of the requirements of s 120(1) of the Act was satisfied:

    Prior to his transfer to Mrs Pekar, Mr Pekar held a joint tenancy interest in the residential property. That interest was a property interest even though the title was jointly held with his wife.

    The transfer from Mr Pekar to Mrs Pekar occurred on 16 July 2012 — within the period of five years prior to 25 July 2014, which was the date of Mr Pekar’s bankruptcy (s 120(1)(a)).

    Mrs Pekar gave no consideration for the transfer (s 120(1)(b)).

27    Mr Pekar’s reliance on ss 120(3) and 120(3A) is misplaced.

28    The exemption, provided for in s 120(3), does not apply because the transfer did not take place “more than 4 years before the commencement of the bankruptcy”. As a result, the question of Mr Pekar’s solvency did not, as the trial judge held, arise. The rebuttable presumption, provided for in s 120(3A), had no work to do in the present circumstances.

29    Mr Pekar made a gift of his property interest in the premises to Mrs Pekar. To the extent that it might be argued that he did so because she was his wife and that her love and affection for him constituted consideration of value, these propositions are negatived by s 120(5).

30    The term “consideration”, in the context of s 120(1), bears its ordinary legal and commercial meaning: see Official Trustee in Bankruptcy v Lopatinsky (2003) 129 FCR 234 at 249; [2003] FCAFC 109 at [94] (Whitlam and Jacobson JJ). There was no consideration for the transfer.

31    Mr Pekar’s argument, to the extent that it relied on s 120(7)(b) of the Act, is misconceived. The paragraph is concerned with property (not a person) that did not previously exist. There is no dispute, in the present proceeding, that, even if the relevant property interest had not existed previously (cf Peldan v Anderson (2006) 227 CLR 471 at 482–483; [2006] HCA 48 at [26]–[31]), Mr Pekar held an interest in the property prior to the transfer to Mrs Pekar, and that Mrs Pekar had, and retains, an interest in it.

32    The trial judge was, therefore, correct, for the reasons which he gave, in holding that the transfer was void against the trustee and that Mr Pekar’s interest vested in his trustee.

33    Neither of the errors, attributed to the trial judge, has been made out. In these circumstances, I would have been minded immediately to dismiss the appeal.

34    I was, however, concerned about the orders made by the trial judge with a view to bringing about the sale of the property. Although the declarations which he made appeared to recognise that only one half interest of the property vested in the trustee, the orders which followed seemed to be more appropriate for a case in which the bankrupt had been the sole proprietor of the relevant property. The orders do not (in terms at least) recognise that Mrs Pekar retains an interest in the property and do not protect that interest.

35    Mrs Pekar had been on notice that orders for possession and sale of the property were sought. Despite this, she had not been legally represented. It was evident from his Honour’s reasons for judgment that no arguments had been directed to the question of his power to make such orders. Discretionary considerations seem to have only been lightly touched upon.

36    In the circumstances, and notwithstanding the fact that these consequential orders had not been the subject of any appeal grounds, I sought written submissions from the parties on these questions, bearing in mind that Mrs Pekar had also not been legally represented in this Court.

37    The trustee submitted that orders of the kind found in paragraphs 3 to 8 of the trial judge’s orders were commonly made in proceedings of the present kind. Power to make such orders was, it was submitted, to be found in ss 30 and 77 of the Act.

38    Section 30(1) confers a broad power on the Court to make such orders as the Court considers necessary for the purposes of carrying out, or giving effect to, the Act. Despite the breadth of this power, it was held by the Full Court in Coshott v Prentice (2014) 221 FCR 450 at 457 and 473; [2014] FCAFC 88 at [20] and [100] (Siopis, Katzmann and Perry JJ), that s 30(1) did not empower the Court to make an order for the sale of property where such an order would destroy the interest in the property of a person who was not the bankrupt. The Court did, however, contemplate that an order could be made under s 30(1) against a non-bankrupt if that person had failed to comply with his or her obligations under the Act: see at 472 [95]; see also Aravanis & Roy (Trustees), in the matter of Destanovic (Bankrupt) v Destanovic [2016] FCA 388 at [18]. There is no suggestion in this proceeding that Mrs Pekar has in any way been derelict in her responsibilities under the Act.

39    Section 77(1) of the Act imposes a number of duties on a bankrupt. The bankrupt is required, for example, to “execute such instruments and generally do all such acts and things in relation to his or her property and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee”: see s 77(1)(e). The bankrupt must also aid, to the utmost of his or her power, in the administration of his or her estate: s 77(1)(g).

40    Section 77(1) could, therefore, arguably, support paragraph 3 of the trial judge’s orders to the extent that it imposes an obligation on Mr Pekar to deliver vacant possession of the property to the trustee. The section does not apply to Mrs Pekar.

41    The FCC’s power to make orders of the kind presently under consideration are not, therefore, wholly supportable pursuant to ss 30 or 77 of the Act in the present circumstances. Other sources of power may, however, be available.

42    In Coshott, the Full Court held that, in a case in which an undivided one half interest in a property had vested in the bankrupt’s trustee pursuant to s 58 of the Act and the remaining half interest was held by a non-bankrupt (as a tenant in common with the trustee), an order for sale of the property could be made under State legislation (picked up through s 79 of the Judiciary Act 1903 (Cth)): see at 476 [116]. The Full Court also held that the order for sale comprised part of the “matter” before the Court for the purposes of Chapter III of the Constitution, namely the question of ownership of the bankrupt’s interest in the property: at 476–477 [119]–[122]. The State legislation there considered was s 66G of the Conveyancing Act 1919 (NSW). That section provided that, where property was held in co-ownership, the Supreme Court could, on application by one or more of the co-owners, appoint trustees of the property and vest it in them to be held by them on trust for sale or for partition. Co-ownership was defined to mean “ownership whether at law or in equity in possession by two or more persons as joint tenants and tenants in common”: s 66F(1). The Full Court held that this Court could order that the trustee was empowered to sell the property pursuant to these provisions.

43    Similarly, the sale of the property presently under consideration, and the distribution of the proceeds, could be effected pursuant to various provisions of Part IV of the Property Law Act 1958 (Vic) (“the Property Law Act”). Under s 225, a co-owner of land may apply to the Victorian Civil and Administrative Tribunal (“VCAT”) for orders including the sale of land and the division of the proceeds among co-owners. Section 228(1) provides that the VCAT may make any order it thinks fit in order to ensure that a just and fair sale or division of land occurs. Among the orders which it can make, are orders that the land be sold and the proceeds of the sale be divided among the co-owners (s 228(2)(a)). As was the case with s 66G of the Conveyancing Act 1919 (NSW), “co-owner” in the relevant part of the Property Law Act means “a person who has an interest in land or goods with one or more other persons as — (a) joint tenants; or (b) tenants in common”: s 222.

44    The reference to “an interest” in s 222 appears sufficiently broad to encompass equitable as well as legal interests: cf Krsteski v Jovanoski [2011] VSC 166 at [42]–[44] (Macaulay J). Thus, it appears that a trustee in bankruptcy is able to apply for an order under Part IV of the Property Law Act at the point that the bankrupt’s property vests in equity, even if legal title has not yet vested because registration in accordance with s 51 of the Transfer of Land Act 1958 (Vic) is still outstanding. As to the nature of the trustee’s equitable interest, this Court has held that, where a transfer which caused a wife to become the sole proprietor of a property (where previously she held her interest as a joint tenant with her husband) was avoided under s 120, upon the husband becoming a bankrupt, the trustee became entitled in equity to an interest in the property as a tenant in common in equal shares with the wife: see Re Lucera; Ex parte Official Trustee in Bankruptcy v Lucera (1994) 53 FCR 329 at 337; [1994] FCA 715 at pp 13–14 (Olney J). Other authority supports the view that, where such a transfer is void pursuant to s 120, from the date of the bankruptcy, the wife as owner will hold half of the interest in the property on trust for the trustee in bankruptcy: see Anscor Pty Ltd v Clout (2004) 135 FCR 469 at 482; [2004] FCAFC 71 at [43(h)] (Lindgren J).

45    By s 231, the VCAT is empowered to appoint trustees for the purposes of the sale of land. By s 232, the VCAT may order that land be sold by private sale or at auction (s 232(a)), that an independent valuation of the land be undertaken (s 232(e)) and that the proceeds of the sale be divided (s 232(h)). A number of other potentially relevant orders are provided for in that section. They include orders that fair market and reserve prices be fixed (ss 232(c) and (d)), that the sale be completed within a specified time (s 232(f)) and that the costs of the sale be met by one or more of the co-owners or from the proceeds of the sale (s 232(g)).

46    A State court has jurisdiction to hear an application under Part IV of the Property Law Act in proceedings commenced in such a court if the issue of co-ownership of land arises in the course of that proceeding (s 234C(4)(a)), or if, in the court’s opinion, special circumstances exist which justify that court hearing the application (s 234C(4)(b)). “Special circumstances” is defined to mean circumstances in which the matter that is the subject of an application is complex (s 234C(5)(a)) or where that matter, or a substantial part of that matter, does not fall within the jurisdiction of the VCAT (s 234(5)(b)). Section 234D of the Property Law Act provides that, in any proceeding in relation to the co-ownership of land, a State court may make any order which the VCAT could make under Part IV of the Act (in which ss 228, 231 and 232 appear).

47    Sections 234C(4) and 234D and the associated provisions in Part IV, when picked up pursuant to s 79 of the Judiciary Act 1903 (Cth), empower this Court to make orders which the VCAT is empowered to make under the Property Law Act. I am also satisfied that such orders form part of the “matter” before this Court, namely the question of the ownership of the interest in the property which Mr Pekar transferred to Mrs Pekar. Any order for sale is dependent upon it being established that the transfer is void against the trustee and that Mr Pekar’s interest vests in the trustee: cf Coshott at 476–477 [119]–[122].

48    The intent of the trial judge’s orders is clear: he considered that the property should be sold and that half of the proceeds should be available to the creditors, once the costs of the sale had been provided for.

49    It will be necessary to vary the orders to give effect to this evident intention and to deal with the time at which vacant possession of the property is to be granted. It also appears that there is a slip in paragraph 4 of the trial judge’s orders: “he” in the second line should, I think, read “she”. I could remit the task of reformulating the orders to the trial judge. That would, however, create even further delay in what has already become an overlong process of litigation and add to the costs of the proceeding.

50    The appeal by Mrs Pekar is directed at the declaration made in paragraph 1 of the trial judge’s orders. For the reasons given, that declaration is unimpeachable. I therefore propose to order that the trial judge’s orders be varied as follows:

    There should be a declaration that the bankrupt’s interest in the property vests in the trustee in bankruptcy.

    The trustee in bankruptcy should be appointed as trustee for the purposes of the sale of the property.

    Mr and Mrs Pekar should be required to deliver vacant possession of the property on or before 30 June 2017.

    Both Mr and Mrs Pekar should be required to remove all their personal possessions prior to the delivery of vacant possession.

    Provision should also be made for the payment of the costs of the sale and distribution of the proceeds.

51    There will also be a need to make provision for the award of costs of the proceeding in the FCC and in this Court.

52    The appeal should be dismissed.

Associate:

Dated:    30 May 2017