Federal Court of Australia

Ruhe (Trustee) v Australian Securities and Investments Commission [2022] FCA 354

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to ss 30(1)(b), 30(5)(a) and 77(1)(g) of the Bankruptcy Act 1966 (Cth), within 21 days, Roderic William Power (Mr Power) and Margaret Christine Power (Mrs Power) must:

(a)    vacate the property identified in Certificate of Title Volume 82 Folio 21204, more particularly known as 29 Lakeview Street, Toukley in the State of New South Wales (Property), and

(b)    give possession of the Property to Alice Fay Ruhe (Ms Ruhe) in her capacity as liquidator of Rodmarg Pty Ltd (in liquidation) (ACN 160 970 865) (RodMarg) and RodMargy Pty Ltd (in liquidation) (ACN 160 971 086) (RodMargy), and/or as receiver of the Coastal Accommodation Unit Trust and the Power Secure Self-Managed Super Fund.

2.    A warrant of possession be issued forthwith substantially in the form of Annexure A to this order, such warrant to lie in the Registry and not to issue unless Ms Ruhe files an affidavit within 35 days, deposing that:

(a)    Mr Power and Mrs Power have not complied with all of Order 1, and

(b)    Ms Ruhe does not have possession of the Property.

3.    The affidavit referred to in Order 2 may be made by Ms Ruhe’s solicitors.

4.    On Ms Ruhe or the Sheriff taking possession of the Property, Mr Power and Mrs Power, their servants and agents be restrained from:

(a)    entering on or remaining on the Property,

(b)    going within 30 metres of the Property, and

(c)    hindering the sale of the Property by Ms Ruhe.

5.    Mr Power and Mrs Power must remove from the Property all vehicles, rubbish and chattels which have not vested in the applicants in their capacity as trustees of the bankrupt estates of Mr Power and Mrs Power, or vested in Ms Ruhe (Personal Property).

6.    If Mr Power and Mrs Power fail to comply with Order 5, the applicants and Ms Ruhe are empowered to remove and dispose of any and all Personal Property on the Property as they see fit.

7.    Ms Ruhe be at liberty to sell the Property and Ms Ruhe and the applicants be at liberty to sell any Personal Property and receive the net proceeds of sale for order to satisfy the debts of Mr Power and Mrs Power as well as RodMarg and RodMargy.

8.    Ms Ruhe’s costs of selling the Property be paid from the sale proceeds of the Property and be costs in the liquidation of Rodmarg and RodMargy.

9.    The costs of Ms Ruhe and the applicants of removing, disposing and selling any Personal Property be paid from the sale proceeds of the Personal Property, and be paid the bankrupt estates of Mr Power and Mrs Power, and be costs in the liquidation of Rodmarg and Rodmargy.

10.    The costs of the application are proper costs of the liquidation of Rodmarg and Rodmargy.

11.    Mr Power and Mrs Power have liberty to apply.

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

Annexure A

ORDERS

THE COURT ORDERS THAT:

1.    Order 1 of the orders dated 31 March 2022 be amended pursuant to r 39.05(h) of the Federal Court Rules 2011 (Cth) to delete the reference to s 30(5)(b) and insert in its place s 30(5)(a).

2.    Order 2 of the orders dated 31 March 2022 be amended pursuant to r 39.05(h) to delete the word “application” and insert in its place the word “order”.

3.    Annexure A to the orders dated 31 March 2022 be amended pursuant to r 39.05(h) to delete the first page annexing a warrant of possession.

4.    Annexure A to the orders dated 31 March 2022 be amended pursuant to r 39.05(h) by substituting “Roderick” with “Roderic”.

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

REASONS FOR JUDGMENT

Ex tempore

(Revised from transcript)

O’CALLAGHAN J:

1    On 15 April 2021, the court made orders appointing the first named applicant, Ms Alice Ruhe, as the liquidator of two companies and the receiver of two trusts, and that the assets of the two companies be sold to pay their debts and the debts of the bankrupts, Mr Roderic William Power and Mrs Margaret Christine Power (the bankrupts, or Mr Power and Mrs Power). The named relevant asset is a property at 29 Lakeview Street, Toukley, in New South Wales (the Lakeview property). The need for this application is that Ms Ruhe has been unable to sell the Lakeview property because the bankrupts have refused to vacate possession of it.

2    By an amended interlocutory application dated 11 March 2022, the applicants seek orders for possession of the Lakeview property, restraining the bankrupts from hindering the sale of it or removing personal property from it, and empowering the applicants to deal with any personal property left at it. Compare White & Lynn [1999] FCA 841; Trustee of the Property of Brian John Byrne, a Bankrupt v Byrne [2020] FCA 1532; Weston & Szepesvary (No 2) [2015] FCCA 3517. Obviously enough, the ultimate purpose of the orders is to assist the applicants in fulfilling their obligations as bankruptcy trustees, liquidators and receivers to recover assets for the benefit of creditors.

3    The principle affidavit in support of the application is an affidavit of Ms Ruhe sworn 22 February 2022. A number of affidavits of service of this application are also relied on, being two affidavits of Mr Brendan Moore sworn 23 and 29 March 2022, an affidavit of Ms Angela Muser affirmed 29 March 2022, and an affidavit of Ms Bianca Quan sworn 30 March 2022.

4    The background facts are set out in Ms Ruhe’s affidavit sworn 25 February 2021.

5    The relevant sequestration orders were made against Mr Power and Mrs Power on 22 March 2016 and 30 November 2017, respectively. The applicants, as trustees of their bankrupt estates, commenced this proceeding on 5 March 2021. On 15 April 2021 the court made orders including the following:

5.    Pursuant to s 57 of the Federal Court of Australia Act 1976 (Cth), Alice Fay Ruhe be appointed as the receiver of:

(a)    the Coastal Accommodation Unit Trust; and

(b)    the Power Secure Self-Managed Super Fund.

6.    The assets of RodMarg and RodMargy be sold in order to satisfy the debts of RodMarg and RodMargy as well as the bankrupts, namely Roderic William Power and Margaret Christine Power.

6    As Ms Ruhe has deposed, since the making of those orders, the applicants have been unable to obtain possession of the Lakeview property despite repeated requests made to the bankrupts to do so.

7    In summary, the evidence discloses that over the course of the administration of their bankrupt estates, the bankrupts have either not engaged with the applicants, or have done so on a very limited basis. They did not comply with summonses for examination under s 81 of the Bankruptcy Act 1966 (Cth) (the Act). An arrest warrant was then issued against them on 11 December 2019, and executed on or about 19 December.

8    They were brought before the court on 20 December 2019 and remanded on bail on the condition that they attend court on 10 February 2020, the date to which the summonses were adjourned. They again failed to attend examination on that day, and a second arrest warrant was issued against them. They were subsequently arrested and refused bail. They were ultimately examined on 4 March 2020.

9    Repeated requests to vacate the Lakeview property have been made of the bankrupts, including in May 2021 and September 2021. It is true to say that they have engaged in part with the applicants’ employees and solicitors, but not in any fashion which has in any way assisted the applicants in discharging their duties.

10    The application seeks to enforce possession of the Lakeview property and relies on a number of different provisions, namely, ss 30(1)(b), 30(5)(a) and 77(1)(g) of the Act, s 422(a) of the Corporations Act 2001 (Cth), s 90-15 of Schedule 2 to the Corporations Act (the Insolvency Practice Schedule (Corporations)), and r 41.10 of the Federal Court Rules 2011 (Cth).

11    It is not necessary to encumber these reasons by setting out each of those provisions. The powers contained in the provisions of the Act to which I have referred are sufficient for current purposes, and are as follows:

30 General powers of Courts in bankruptcy

(1)    The Court:

…

(b)    may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.

…

(5)    Where:

(a)    a bankrupt, a debtor or any other person has failed to comply with an order or direction of a Registrar, or with a direction or requirement of an Official Receiver or trustee, under this Act; …

…

the Court may, on the application of the Registrar, Official Receiver, trustee or Inspector‑General, as the case requires:

(c)    order the person who has failed to comply with the order, direction, requirement or request, as the case may be, to comply with it; or

(d)    if it thinks fit, make an immediate order for the committal to prison of that person.

77 Duties of bankrupt as to discovery etc. of property

(1)    A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause:

…

(g)    aid to the utmost of his or her power in the administration of his or her estate.

12    Section 30(5)(a) provides that where a bankrupt “has failed to comply with an order or direction of a Registrar, or with a direction or requirement of … [a] trustee, under this Act” the court may “order the person who has failed to comply with the order, direction, requirement or request … to comply with it …”

13    The cases make it clear that the power to make orders under s 30(1)(b) of the Act must be exercised for the purposes of carrying out or giving effect to the Act in the particular case. Those purposes are to provide for the appropriation and equitable distribution of the assets of the insolvent debtor.

14    Further, the cases make clear that the provision is not to be construed narrowly. On the contrary, it is a facultative provision giving the court full power (within obvious limits of jurisdiction) to make such orders as it considers should be made to carry out and give effect to the Act. Accordingly, the section has been held to provide sufficient power to make orders against a bankrupt for the vacation of property, issuing a warrant of possession and for the sale of property in circumstances where the bankrupt does not comply with their obligations under the Act.

15    In my view, it is clearly appropriate to make each of the orders sought in this application, in light of the conduct of Mr Power and Mrs Power summarised above. As Mr Harrison, of counsel, who appeared for the applicants suggested, I will also include in the orders a provision for liberty to apply so that the bankrupts have an opportunity to be heard in respect of these orders at some later time should they choose so to be heard.

16    I need to mention one final matter. There were four slips in the documents proffered by counsel at the hearing. The first was that the draft order proffered referred, in paragraph 1, to s 30(5)(b) of the Act. On the day of the hearing, in error I made an order that included a reference to that provision. The reference should have been to s 30(5)(a). See [12] above.

17    Accordingly, the order has been amended pursuant to the slip rule (r 39.05(h) of the Federal Court Rules 2011 (Cth)), to delete the reference to s 30(5)(b) and insert in its place s 30(5)(a).

18    The second slip was that order 2 in the draft order identified the annexure as “Annexure A to this application”, rather than as an annexure to the order. That error has also been corrected pursuant to the slip rule by deleting the word “application” and replacing it with the word “order”.

19    The third slip involved the fact that the draft order proffered, in addition to the correct form of the writ of possession applicable in New South Wales, mistakenly included a warrant of possession that was derived from the Victorian legislation, which of course had nothing to do with the matter because the property is located in New South Wales. The order that was issued on the day of the hearing mistakenly also included the Victorian form of warrant. The inclusion of it may be a source of confusion. So I will amend the order by deleting it pursuant to the slip rule.

20    The fourth slip was that Mr Power’s first name was misspelled in the draft writ of possession attached to the original order. That error has also been corrected pursuant to the slip rule by substituting “Roderick” with “Roderic”.

Associate:

Dated:    6 April 2022