Federal Court of Australia

Joyce v Nguyen, in the matter of the Bankrupt Estate of Nguyen [2024] FCA 1248

ORDERS

THE COURT ORDERS THAT:

1.    By 4.30pm (AWST) on 11 December 2024 the respondent deliver up vacant possession of the property located at Unit 5, 117 Brisbane Street, Perth in the State of Western Australia; namely, Lot 54 on Strata Plan 32978 being the whole of the land described in Certificate of Title Volume 2534 Folio 480 (property) to the applicant.

2.    The costs of and incidental to the proceeding up to the date of these orders be costs in the bankruptcy of the respondent.

3.    The parties have liberty to apply on 48 hours’ written notice to vary or discharge paragraphs 1 and (or) 2 of these orders.

4.    The applicant has liberty to apply for further or other relief in aid of paragraph 1 of these orders, which may include orders for enforcement or directions as to the sale of the property, on 48 hours’ written notice.

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

REASONS FOR JUDGMENT

REVISED FROM THE TRANSCRIPT

FEUTRILL J:

1    The applicant is the trustee in bankruptcy of Trihn Thi Tu Nguyen, the respondent.  The trustee was appointed on 18 March 2024.  At that time, by operation of s 58 of the Bankruptcy Act 1966 (Cth), the respondent's property vested in the trustee.  At the time of the appointment of the trustee, the respondent was the registered proprietor of Lot 54 on Strata Plan 32978, being the whole of the land described in Certificate of Title Volume 2534 Folio 480.  The property is located and known as Unit 5, 117 Brisbane Street, Perth, in the State of Western Australia (property).  On 21 May 2024, the trustee became the registered proprietor of the property in accordance with s 234 of the Transfer of Land Act 1893 (WA).  Pursuant to that provision, the trustee was entitled to be registered as proprietor of that property under that Act by virtue of the bankruptcy of the respondent. 

2    By an originating process filed on 10 July 2024 the trustee seeks orders, amongst others, to the effect that the respondent deliver up vacant possession of the property within 21 days and that the costs of and incidental to the application be costs in the bankruptcy of the respondent.  In substance, the trustee relies on the general power in s 30(1)(b) of the Bankruptcy Act that confers power on the Court to make such orders as the Court considers necessary for the purposes of carrying out or giving effect to the Bankruptcy Act.  Further, s 77 of the Bankruptcy Act, which imposes various duties on a bankrupt, including by s 77(1)(g) that the bankrupt aid to the utmost of her power in the administration of the estate.  I accept that the Court has power under s 30(1)(b) and s 77(1)(g) of the Bankruptcy Act to make orders of the kind sought in the application: Colbran v Patten [2023] FCA 1370 at [3] (Feutrill J) and the authorities there cited.

3    Additionally, the trustee has sought the following orders under s 19 and s 30(1)(b) of the Bankruptcy Act and s 126(1) of the Property Law Act 1969 (WA).

(a)    The applicant have conduct of the sale of and be authorised to instruct an agent and auctioneer for the purpose of selling the property.

(b)    The applicant decide whether the property is to be sold by public auction or private treaty;

(c)    The applicant decide whether or not to set a reserve price for any auction of the property, and if set, at what price.

(d)    The applicant be empowered to sign any contract of sale, transfer of land, and any other conveyancing documents on behalf of the respondent to give effect to the sale in the event that the respondent fails or refuses to sign these documents within such time as required by the applicant's solicitors.

(e)    The respondent's solicitors do all such things as may reasonably be required by the applicant, its selling agent or solicitors for the purpose of achieving a sale of the property, including providing access to buildings on the property for the purposes of valuation and viewing by potential purchasers.

(f)    The respondent has liberty to bid at the sale.

(g)    The net proceeds of the sale of the property, after payment of what shall be due to the encumbrancer or encumbrancers according to their priorities and of all other proper costs, charges and expenses of the sale, be paid to the applicant.

4    Section 126(1) of the Property Law Act deals with actions for partition. Such actions involve the sale of property where there is co-ownership. That section is not relevant to the application before me. Nonetheless, the orders sought may be made within the power conferred by s 30(1)(b) of the Bankruptcy Act. The Court also has a broad power to make such orders as it thinks appropriate in relation to the administration of a regulated debtor's estate under s 90-15 of Schedule 2 - Insolvency Practise Schedule (Bankruptcy) to the Bankruptcy Act on its own initiative or an application of the trustee.

5    The originating process and affidavit in support of Helen Louise Joyce affirmed 9 July 2024 were personally served on the respondent. The respondent has not filed an address for service and did not appear on the application when it was called on for hearing.

6    The trustee relies on and has read her affidavit in support of the application affirmed 9 July 2024; an affidavit of Bernadette Jane Riseborough sworn 15 August 2024; and an affidavit of Thomas Leonard O'Donnell sworn 2 October 2024. The latter two affidavits deal with questions of service.

7    The affidavit of Ms Riseborough indicates that the originating process and affidavit of Ms Joyce were personally served on the respondent. The affidavit of Mr O'Donnell indicates that the respondent was notified of the hearing today by the trustee, through her solicitors, and that notice of the hearing today was also served personally on the respondent. The matter, when called on for hearing today was called both within and outside the courtroom and there was no appearance by the respondent.

8    By s 54 of the Bankruptcy Act, the respondent was required to file a statement of affairs within 14 days from the day she was notified of her bankruptcy. She has not done so. The trustee has requested the respondent to do so by correspondence sent to the Brisbane Street address and another address at which the respondent was thought to be residing. The respondent has not responded to the trustee's correspondence. The trustee has also requested the respondent to deliver all books which relate to her financial affairs, and again, the respondent has not responded to that request.

9    Ms Joyce deposes that at the time of swearing her affidavit, the respondent has neglected, refused or failed to vacate the property and remains in possession of it. However, in the correspondence the trustee has exhibited to her affidavit, there has not been a request that the respondent deliver up vacant possession of the property to the trustee, therefore there is no evident foundation for the claim of neglect, refusal or failure to deliver up vacant possession. Nonetheless, I accept that possession will no doubt better facilitate sale of the property, although it is not in fact necessary for the property to be sold because the trustee is the registered proprietor of the property.

10    Notwithstanding the absence of a statement of affairs, the trustee has undertaken an investigation into the assets and liabilities of the respondent. These are set out in a ‘Combined Initial Notice and Statutory Report to Creditors of the Bankrupt Estate of Trinh Thi Tu Nguyen’ dated 17 May 2024, which is an exhibit to Ms Joyce's affidavit. In summary, while no formal valuation or appraisal has been undertaken of the property, the trustee estimates the value of the property to be $500,000. She estimates sale costs to be 3% of the sale price, or $15,000. The only creditor of the respondent is the owners of Northbridge Village Strata Plan 32978, which was the petitioning creditor. Northbridge Village's debt is in the sum of $43,450.14. It follows that the trustee estimates a healthy surplus on sale of the property and a return to creditors of 100 cents on the dollar.

11    There is no registered mortgage over the property and no secured creditors, although I do note that the trustee in the report to creditors treats Northbridge Village as if it were a secured creditor because evidently, on sale of the property, the debt owed to Northbridge Village must be paid out of the sale proceeds. I assume there is some statutory obligation for that process to be undertaken, although it has not been provided to me. Although there has been no formal request that the respondent deliver up vacant possession of the property to the trustee, I am satisfied the trustee has unsuccessfully sought the respondent's cooperation with respect to other aspects of the administration of her estate. The facts deposed to in and documents exhibited to Ms Joyce's affidavit indicate that the respondent has failed to cooperate with reasonable requests of the trustee for assistance in the administration of her estate.

12    There is no information before me to suggest that the trustee is not entitled to possession of the property as the registered proprietor and trustee in bankruptcy. I am also satisfied that there is sufficient value in the property to satisfy all debts of the respondent. In these circumstances, I am satisfied that an order should be made under s 30(1)(b) of the Bankruptcy Act to the effect that the respondent deliver up vacant possession of the property to the trustee. It is self-evident that sale of the property will be facilitated and better effected without the respondent in possession. Also, it is likely to increase a sale price that can be achieved which will benefit both the creditors and the respondent.

13    Nevertheless, there is no evidence the respondent has specifically failed to cooperate in facilitating the sale of the property and I am concerned that a 21-day period to vacate the property is an unreasonably short period of time for the respondent to arrange her affairs and find alternative accommodation. In this respect, a period of approximately 60 days is a more reasonable period. Having regard to the absence of a formal request, the possibility the respondent will cooperate in the sale of the property and the potential hardship to the respondent if she is unable to secure alternative accommodation, I will also make an order giving the parties liberty to apply to vary or discharge the order to deliver up possession within that timeframe.

14    As to the various ancillary orders the trustee seeks to facilitate the sale process, I am not satisfied that these are necessary or appropriate to make at this time. In the event the respondent refuses to provide the trustee with vacant possession, or the trustee considers it necessary or desirable to obtain directions from the Court regarding the mechanics of the sale process, the trustee may apply to the Court for enforcement of the order for delivery of vacant possession or for directions. Therefore, I will also grant the trustee liberty to apply for further or other relief in aid of the order for delivery of vacant possession.

Associate:

Dated:    28 October 2024