Thorn Australia Pty Ltd v Andersen
[2017] QDC 314
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- Unreported Judgment
- Thorn Australia Pty Ltd v Andersen[2017] QDC 314
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Thorn Australia Pty Ltd v Andersen[2017] QDC 314
Thorn Australia Pty Ltd v Andersen[2017] QDC 314
DISTRICT COURT OF QUEENSLAND
CITATION: | Thorn Australia Pty Ltd v Andersen & Anor [2017] QDC 314 |
PARTIES: | THORN AUSTRALIA PTY LTD (applicant) v SHAWN IAN ANDERSEN (first respondent) and AMANDA JANE PASCOE (second respondent) |
FILE NO: | 601 of 2017 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court of Queensland |
DELIVERED ON: | 21 December 2017 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 27 November 2017 |
JUDGE: | Richards DCJ |
ORDER: | The District Court has jurisdiction to hear and determine the applicant’s application. |
CATCHWORDS: | BANKRUPTCY – BANKRUPTCY COURTS – JURISDICTION AND POWERS OF COURT – GENERALLY – whether the District Court has jurisdiction to hear this matter because of bankruptcy and title in the property vesting in the trustee in bankruptcy Bankruptcy Act 1966 (Cth), ss 5, 27, 31, 58 Property Law Act 1974 (Qld), ss 30A Uniform Civil Procedure Rules 1999 (Qld), r 72 Cordes v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235 Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales & Anor (2008) 171 FCR 380 Morris Finance Limited v Brown [2017] FCAFC 97 Scott v Bagshaw [2000] 99 FCR 573 The Trustee Property of Paul Jason Uhrhane, a Bankrupt and Anor v Gunn & Anor (No 2) [2013] QDC 287 |
SOLICITORS: | Mr C Yam of SLF Lawyers for the applicant Mr R Burgio of Legend Legal Group for the respondents Mr B Long of Celtic Legal for Tony Johnson Trustee of bankrupt estate of Andersen Ms K F Kalkman of Patane Lawyers for Australian Liquor Marketers Pty Ltd |
- [1]The applicant seeks declarations that the applicant has an equitable charge over the interest of the first respondent in the land and improvements situated at 3A Edgewater Terrace, Idalia and seeks the appointment, pursuant to s 30A of the Property Law Act 1974, of statutory trustees for the sale of the property. The applicant is also seeking, pursuant to r 72 of the Uniform Civil Procedure Rules 1999, leave to proceed with the hearing of the originating application filed by the applicant in the court on 17 February 2017 and that Anthony James Johnson, trustee of the property of Shawn Andersen, a bankrupt, be included as a party to the proceedings.
- [2]The first respondent was a party to a secured guarantee dated 10 December 2015 signed by the first respondent. It guaranteed that a company by the name of Andersen One Pty Ltd would pay monies due and owing by that company and he guaranteed payment against any property that he owned.
- [3]The first respondent was declared bankrupt on 14 June 2017. This application was filed before that date, namely 17 February 2017. A preliminary question has been taken in relation to whether this court has jurisdiction to hear this matter or whether because of the bankruptcy and title in the property vesting in the trustee in bankruptcy the matter should be stayed here pending hearing in the Federal Court or dismissed for want of jurisdiction.
- [4]In making the submission that this court does not have jurisdiction to deal with this matter, the first and second respondents, the trustee in bankruptcy and the counsel intervening on behalf of Australian Liquor Marketers Pty Ltd a caveator, relied on the decision in Cordes v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235.
- [5]In that case the Court of Appeal looked at the stay of a Supreme Court action on the basis that it came within the jurisdiction of the federal Court and that s 27 of the Bankruptcy Act 1966 vested jurisdiction exclusively in the Federal Courts. That decision involved the appellant seeking declarations that she was entitled to a property even though she had been made bankrupt by her own petition in 2006. There were at the time Family Court proceedings where agreement had been reached that the trustee in bankruptcy would have title in the property and that he would sell the property. The appellant commenced proceedings in the Supreme Court to have the property reconveyed to her and the trustee in bankruptcy brought an application in the Federal Magistrates Court seeking declarations that the ownership of the property vested in him. The Court of Appeal held that the provisions of the Bankruptcy Act 1966, particularly ss 5 and 27, meant that the Federal Magistrates Court had exclusive jurisdiction over all courts in matters involving bankruptcy. It was held that because the claim for leave required determination of title in the Moggill property that the pleadings fell within the exclusive jurisdiction of the Federal Court or the Federal Magistrates Court under s 27(1) of the Bankruptcy Act 1966. In deciding the matter against the appellant, the Court referred to the matter of Scott v Bagshaw [2000] 99 FCR 573:
“The issue in Scott v Bagshaw was whether jurisdiction under the Bankruptcy Act arose at all where a trustee of a family trust had asserted a claim to an equitable charge in his favour over properties of which the bankrupt and his wife (who was not bankrupt) were joint proprietors. The Full Federal Court, in a unanimous judgment, explained that s 31(1)(f) served to elucidate what fell within “bankruptcy” as the term is defined in s 5(1) and used in s 27(1). It was obvious from s 31(1)(f), the court said, that its drafter intended that applications with the effect of declaring for or against the title of the trustee in bankruptcy to property would fall within the concept of jurisdiction in bankruptcy. On the face of the pleadings, the claim was one to realise the equitable charge; there was no reference to any section of the Bankruptcy Act and the matter could proceed to judgment without any reference to the Act. But, the court said, to the extent that the orders sought would establish title in the appellant, they must have a “necessary adverse effect” on the title of the trustees in bankruptcy. That was a matter falling within the jurisdiction in bankruptcy. The decision in Sutherland v Brien was to be distinguished; in light of s 31(1)(f), it could not be said in the instant case that the proceeding was not “‘under or by virtue of’ the Act”.”[1]
- [6]The court went on to say that following Scott v Bagshaw[2]and another case of Meriton Apartments Pty Ltd & Anor v Industrial Court of New South Wales & Anor[3]that decisions involving findings for or against trustee in bankruptcy’s title in property fall within the jurisdiction of the Federal Court and that the Court of Appeal should not depart from an appellate decision of the Federal Court unless convinced that its interpretation is wrong. Following that case the court held that the issue fell within the exclusive jurisdiction of the Federal Court.
- [7]I was also referred to a single District Court judge decision of The Trustee Property of Paul Jason Uhrhane, a Bankrupt and Anor v Gunn & Anor (No 2) [2013] QDC 287 where this issue was raised. In following Cordes[4]the learned judge decided that he didn’t have jurisdiction to hear the matter because of the provisions of s 31 and s 27 of the Bankruptcy Act 1966.
- [8]If these cases were the only decisions on the matter then the trustees in bankruptcy and respondents would undoubtedly be right. However the applicant is relying on s 58 of the Bankruptcy Act 1966 which provides:
“58 Vesting of property upon bankruptcy—general rule
- (1)Subject to this Act, where a debtor becomes a bankrupt:
- (a)the property of the bankrupt, not being after‑acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
- (b)after‑acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee. …
- (3)Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor: …
- (b)except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.…
- (5)Nothing in this section affects the right of a secured creditor to realize or otherwise deal with his or her security.”
- [9]This section was considered in detail in Morris Finance Limited v Brown [2017] FCAFC 97. The Court considered whether a legal proceeding seeking to realise or enforce an equitable charge through judicial process falls within 58(5) of the Bankruptcy Act 1966, and therefore does not require leave under s 58(3)(b). Morris Finance had sought an equitable charge of land owned by Mr and Mrs Brown pursuant to a commercial goods lease between Morris Finance and Mr Brown. Mrs Brown had given a guarantee in favour of Morris Finance to secure the performance of Mr Brown’s obligations and each of them charged their interest in freehold land including the Coopernook property to secure their obligations to Morris Finance thereby creating an equitable charge over their interests. Morris Finance filed in the Supreme Court of New South Wales seeking relief under 103(2) of the Conveyancing Act 1919 (NSW) to sell the property and it was argued before the primary judge that leave was required under 58(3)(b) to proceed with this application to take possession. In a long judgment which examined the history of the section the court held:
“First there is cogent authority to support the proposition that legal proceedings brought by a mortgagee seeking an order for possession of mortgage property falls within s 58(5) … In such cases, the claimant is seeking to enforce a remedy being a right to possession. To enforce a right of possession for the purposes of sale is treated as an act of realisation of the relevant security, whether by self-help or through judicial process.
By parity of reasoning, Morris Finance’s proceeding is in substance the exercise of a “right of realisation by judicial process” to use Heenan J’s phrase in Evenwood Pty Ltd v Conway [1997] WASC 14. It seeks orders for sale, possession and the distribution of proceeds by way of judicial enforcement of its equitable charge. There is no reason to treat this security interest differently from a registered mortgage where a mortgagee approaches a court seeking an order for possession. Indeed, to do so would be inconsistent with construing s 58(5) “relatively liberally” as Young JA described in Hanshaw at [42]. …
… The breadth of “secured creditor” and “security” embrace an equitable charge. And if an equitable charge can only be enforced and realized through judicial process, in our view the words in s 58(5) “to realize” are sufficiently broad to embrace the invocation of judicial process to seek an order for sale and consequential orders, that being the only way to enforce an equitable charge. Otherwise holders of equitable charges would for all practical purposes not be able to rely on the benefit of s 58(5), which would contradict the premise, namely, that s 58(5) is sufficiently broad to embrace equitable charges. We also consider that the steps of seeking an order for sale (and consequential orders) are within the expression “otherwise deal” construed broadly.”[5]
- [10]
- [11]I accept that were it not for the fact that Cordes[8]also did not refer to s 58(5) of the Bankruptcy Act in deciding the matter before it and relied on Scott v Bagshaw[9]which has been distinguished in Morris Finance[10]that the argument about jurisdiction would be much stronger but in light of the ruling of the Full Court of the Federal Court seems to me that it is appropriate that I follow that judgment and accordingly I find that there is jurisdiction for this matter to be heard. I understand that the parties seek a further date to argue the substance of the application.
Footnotes
[1] Cordes v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235 [31].
[2] [2000] 99 FCR 573.
[3] (2008) 171 FCR 380.
[4] Cordes v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235.
[5] Morris Finance Ltd v Brown [2017] FCAFC 97 at [43] - [45].
[6] [2000] 99 FCR 573.
[7] Morris Finance Ltd v Brown [2017] FCAFC 97 at [59].
[8] Cordes v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235.
[9] [2000] 99 FCR 573.
[10] [2017] FCAFC 97.