Holmes v Dillon & Ors (No.2) [2010] FMCA 399 (13 May 2010)

Last Updated: 9 June 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HOLMES v DILLON & ORS (No.2)

[2010] FMCA 399

BANKRUPTCY – Application to extend time for reviews – no merit to proposed applications for review – application dismissed.

Bankruptcy Act 1966, s.30 Property Law Act 1974 (Qld), s.38

Re Bilen, ex-parte Sistrom (1985) FCA 120 Park v Barclay [2010] FMCA 397

Applicant:

LILLE HOLMES (NEE KOSTESKA)

Respondent:

R.S. DILLON & RAYMOND SHANE DILLON

File Number:

BRG 513 of 2006

Applicant:

LILLE HOLMES (NEE KOSTESKA)

Respondent:

R.S. DILLON & RAYMOND SHANE DILLON

File Number:

BRG 932 of 2006

Applicant:

LILLE HOLMES (NEE KOSTESKA)

Respondent:

P.D. SWEENEY PRINCIPAL, SV PARTNERS COURT APPOINTED TRUSTEES

File Number:

BRG 73 of 2010

Judgment of:

Jarrett FM

Hearing date:

13 May 2010

Date of Last Submission:

13 May 2010

Delivered at:

Brisbane

Delivered on:

13 May 2010

REPRESENTATION

Counsel for the Applicant:

In Person

Solicitors for the Applicant:

N/A

Counsel for the Respondent:

Mr Young

Solicitors for the Respondent:

Bennett & Philip Lawyers

ORDERS

BRG 513 of 2006

(1) The applicant’s oral application for adjournment be dismissed.

BRG 932 of 2006

(1) The applicant’s oral application for adjournment be dismissed.

BRG 73 of 2010

(1) The applicant’s oral application for adjournment be dismissed.

And

(1) The application filed on 29 January 2010 be dismissed.
(2) The Applicant deliver up vacant possession of the property at 29 Plantation Road, Tamborine in the State of Queensland and described as Lot 7 on Registered Plan 208247, Count of Ward, Parish of Tamborine with the title reference 17005019 (“the property”) to the Respondent and Terry Grant Van Der Velde (“the Trustees”) and John Gerrard Holmes (“the Co-Owner”) within seven (7) days of the date of this Order.
(3) In the event that the Applicant fails to deliver up vacant possession of the Property in accordance with Order 2 above, that an Enforcement Warrant for Possession of the Property be issued forthwith in favour of the Trustees and the Co-Owner.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE

BRG 513 of 2006

LILLE HOLMES (NEE KOSTESKA)

Applicant

And

R.S. DILLION & RAYMOND SHANE DILLON

Respondent

BRG 932 of 2006

LILLE HOLMES (NEE KOSTESKA)

Applicant

And

R.S. DILLION & RAYMOND SHANE DILLON

Respondent

BRG 73 of 2010

LILLE HOLMES (NEE KOSTESKA)

Applicant

And

P.D. SWEENEY PRINCIPAL, SV PARTNERS COURT APPOINTED TRUSTEES

Respondent

REASONS FOR JUDGMENT

Ex tempore

1. On 29 November, 2001 at about 8.30 pm at the intersection of Fryar Road and River Hills Road, Eagleby, there was a minor traffic accident. The reverberations of that traffic accident are still being felt today, and rather than the ripples from that traffic accident growing smaller over time, they have grown larger and larger. So much so that the ripples that now emanate from that singular event have taken on the proportion of a tsunami which now threatens to sweep away from Ms Holmes the very home in which she lives.
2. These applications before me are applications for review against an order of a registrar to not set aside a bankruptcy notice that was served on Ms Holmes and an order of a registrar to grant a sequestration order against her estate. There is also an application by her to review the decisions of her trustees in bankruptcy, and in particular, their decision to sell her interest in the land upon which her home presently stands. There is a cross-application by those trustees for orders that she deliver up to them vacant possession of that land and permitting them to sell it.
3. The land in question is owned jointly by Mrs Holmes ex-husband and her trustees in bankruptcy. Presumably, the title is held as tenants in common in equal shares. As between Mr Holmes and the trustees in bankruptcy there is no dispute that the property ought to be sold so that the trustees can carry out their statutory function under the Bankruptcy Act to get in the bankrupt’s assets and then distribute them according to the Bankruptcy Act amongst Ms Holmes’ creditors.
4. The applications all turn on the same argument, at least the applications made by Ms Holmes. That is that the judgment entered against her in the Beenleigh Magistrates’ Court many, many years ago now was a judgment that was entered improperly, illegally, without reference to her, and without giving her the opportunity to have her say. Unfortunately, I can not accept any of those arguments.
5. The evidence before me reveals that proceedings were commenced by a person called R.S. Dillon for damages arising out of the traffic accident that I described earlier. Mrs Holmes accepts that she may have been, in a sense, responsible for the collision. Her evidence, which is contained in an affidavit filed in the Supreme Court, which is exhibited to an affidavit that she filed in this court, suggests that as she was driving down the relevant street she became faint and she must have passed out. She collided with the vehicle in front of her. She says, however, that the damage that was done was minor, if there was any at all. And so, when she discovered that judgment had been entered against her in the Beenleigh Magistrates’ Court for a sum in excess of $1800 plus costs and interest, she was taken aback.
6. She says that prior to the proceedings and on many occasions she attempted to settle the matter with R.S. Dillon by offering to pay whatever damage there had been and that she would do so upon receipt of proof of the relevant damages. She may have also asked for three quotes, something which is customary, although not something which is legally mandated. In any event, she says she was afforded none of those courtesies. The only courtesy she received was the judgment.
7. To get the judgment by default, the registrar who granted it must have been satisfied that Ms Holmes was served with the proceedings, and to that end, there was an order made by a magistrate in Beenleigh, Magistrate Webber, who permitted service of the documents on Ms Holmes in a way other than by way of personal service.
8. That order seems to have been made at the same time that an application was made to renew the initiating application for service. There are no particulars before me which would explain why the initiating application needed to be renewed, but Ms Holmes complains that she was not afforded the opportunity to be present at that hearing. Given the nature of the orders made on that occasion, it is of no surprise at all that she was not given notice of it: first of all, because if the proceedings had been served, there would have been no necessity for an order to renew the initiating application; and secondly, if she was able to be contacted and found, no application for an order for substituted service would have been necessary.
9. So prima facie, and on the evidence before me, it seems that she was not afforded the opportunity to appear on that application, probably because there was no means of contacting her. That seems odd, given that she apparently lived at the same address then as she does now, but in any event, it is neither here nor there, because neither of those orders made any findings against Ms Holmes, which translated into the judgment. There were no findings of fact, no apportionment of blame, no attribution of responsibility for the accident, but rather procedural orders that were made which facilitated the service of the documents on her. I do not understand her material to suggest that the documents were not served on her in accordance with the orders for substituted service.
10. Indeed, on questioning from me in submissions she suggested that she had filed a notice of defence. That carries with it the notion that she had received the initiating application which required her to file the notice of defence. The judgment entered by the registrar was one entered in default of appearance. Again, I can infer from that that there was no notice of defence, or if there was, and the judgment was entered wrongly, it would have been set aside. There was an application to set aside the judgment, but that was unsuccessful.
11. From there, the ripples started to get bigger. Ms Holmes was dissatisfied with the amount of the judgment. She complains now that there was no proof of damage to the amount for judgment was granted, no statements from the plaintiff in those proceedings, no witness statements, no affidavits, no proof of damage, no receipts, and no invoices.
12. Whether that is true or not is not clear from the material. But in the context of a default judgment, given in default of appearance or defence, it is not surprising that there were no witness statements or the like. That is the process - the process justified and mandated by the rules, the UCPR.
13. The next step in this sorry saga was the issuing of a bankruptcy notice. The bankruptcy notice, by and by, came to be considered by Registrar Reynolds when she was asked to consider setting that bankruptcy notice aside. The registrar refused to do so, and her decision in that respect was made in 2006. Thus, the application before me now to review that decision is out of time, and in that respect Ms Holmes needs an extension of time within which to commence that application.
14. Consequent upon the bankruptcy notice remaining valid and in force, the creditor applied for the making of a sequestration order against Ms Holmes’ estate based upon her non-compliance with the bankruptcy notice. The bankruptcy notice itself was founded upon her non-payment of the relevant judgment from the Beenleigh Magistrates’ Court.
15. By and by, the creditor’s petition came before Registrar Ramsay, who determined to make a sequestration order. That sequestration order was made in 2007. There was a costs order made as well. The costs were taxed, and there was some assessment of those costs. By that stage, the value of the debt and costs had risen to nearly $8,000.
16. This year Ms Holmes applied for an order to review the decision of Registrar Ramsay. That application is out of time, and an extension of time is necessary for her to pursue it.
17. The granting of extensions of time is an exercise of the court’s discretion. Generally speaking, amongst the factors which inform the exercise of such a discretion include any explanation for the relevant delay and the prospects of the proposed substantive application succeeding.
18. In this case, there is no explanation for the delay. If one accepts the material in Ms Holmes’ affidavits at face value, what is demonstrated on her part is inaction until a point late last year when the trustees began agitating for a sale of her home. That spurred her into action, as one might expect it would. But between when the sequestration order was made in 2007 and late 2009 there is a large delay which remains, on the material, unexplained.
19. More than that, though, I have come to the conclusion that the substantive applications to review the decision of Registrar Reynolds and Registrar Ramsay enjoy such poor prospects of success as to justify the refusal of the requested extensions. In my view, the applications cannot succeed.
20. No justifiable basis has been demonstrated to interfere with either the order of Registrar Reynolds or the sequestration order of Registrar Ramsay. It is true that in an appropriate case, this court has power to go behind a judgment entered in default to ascertain whether, in fact, there truly is a debt that is owed by the debtor to the creditor. This case is founded on a judgment by default. But on Ms Holmes’ own evidence, there is reason to understand that there is, in fact, a true debt behind the judgment. And secondly, there have been attempts by her to have that judgment set aside.
21. In those circumstances, I am reluctant to enter into any examination of the debt behind the judgment and I am content to rely upon the judgment itself as speaking for the debt.
22. The application filed on 29 January, 2010 seeking to review the decision of Registrar Reynolds will be dismissed.
23. The application seeking to review the decision of Registrar Ramsay filed on 29 January, 2010 will be dismissed.
24. I turn then to the application filed on 29 January, 2010 to review the decisions of the trustee in this case. That application is problematic, because it does not specify the particular decisions which are sought to be challenged. It is really by supposition that one comes to the conclusion that it is the decision to sell Ms Holmes’ interest in her home now vested in her trustees in bankruptcy which is sought to be challenged.
25. She has the opportunity to do that under the Bankruptcy Act. She has to bring that application within a certain period of time, and she is out of time for that as well. I can extend time if there are special circumstances, but I am not satisfied there are special circumstances. No basis has been demonstrated in the material to interfere with the decisions made by the trustee. Indeed, it is the trustee’s obligation under the Bankruptcy Act to get in that asset and sell it for the benefit of Ms Holmes’ creditors. It is the case that if the trustees did not do that and the creditors of the bankrupt were prejudiced, the trustees would be derelict in their duty. For those reasons, the application to review the decisions of the trustees filed on 29 January, 2010 will also be dismissed.
26. I turn then to the application in a case filed by the trustees on 6 May, 2010 seeking orders for delivery up of vacant possession of Ms Holmes’ interest in the relevant property and for consequential orders for sale. I am satisfied that I can, and should, make orders for the delivery up of vacant possession. Subsection 30(1) of the Bankruptcy Act provides the court with broad powers to make orders which carry out and give effect to the jurisdiction vested in the court by the Act.
27. There are a number of decisions bearing on the breadth of s.30(1) and by way of example, one only needs to go to the decision Re Bilen, ex-parte Sistrom (1985) FCA 120, where Neaves J pointed out that s.30(1) of the Act gave the court very wide powers to make orders under the Act. At paragraph 8 of his Honour's judgment, he said this:
    • I am unable to accept the argument that this court has no jurisdiction to entertain the trustee's application. In my opinion, subsection 30, subsection (1) of the Bankruptcy Act 1966 is not a provision limiting the court's jurisdiction. It is a facultative provision giving the court full power within the limits of its jurisdiction to be found elsewhere to make such orders as it considers should be made in order to carry out and give effect to the Act. The words used are not words of limitation, but of extension.
28. Whilst the court has very broad power to make orders under the Act, as his Honour pointed out there, the jurisdiction of the court is to be found elsewhere - that is, other than in s.30(1) of the Act.
29. That brings me to the difficulty in this case with making an order for sale. An order for sale in this case is unnecessary. It is unnecessary because by the delivery up of vacant possession and perhaps a vesting order, the trustees in bankruptcy will be entitled to possession of the property and then to deal with it in accordance with the Bankruptcy Act. The co-owner of the property, Mr Holmes, consents to the orders for sale, or at least the evidence demonstrates that he does not oppose a sale of the property. So much appears clear from Ms Holmes’ own affidavits.
30. In those circumstances, an order for sale is entirely unnecessary. During the course of argument, I referred the parties to a decision that I delivered last week in a matter of Park v Barclay [2010] FMCA 397, where I came to the conclusion that the court had no power to make an order for sale in respect of property that was jointly owned by trustees in bankruptcy and a person unconnected with the bankruptcy. The basis for that conclusion was that the jurisdiction that was being exercised was not a jurisdiction to be found in the Bankruptcy Act but was, rather, a jurisdiction that was founded in s.38 of the Property Law Act 1974 (Qld): the power to order the sale of co-owned property.
31. Whilst I pointed that out in the course of submissions and suggested that that might be an impediment to an order in this case, on reflection, it's not, because this is not one of those cases. Here the co-owner agrees with the sale. Here no order for sale is necessary, because once registered on the title and seized of the property, the trustees can deal with it in accordance with the Bankruptcy Act. For those reasons, an order for sale will be refused, but otherwise, there is no reason not to make an order for delivery up of vacant possession to the trustees.
32. Ms Holmes says that she has nowhere else to go. Ms Holmes says that the trustees have been harassing her and that their conduct is deplorable. She may be right about those things, but whether she’s right or not is neither here nor there. The fact is that her trustees in bankruptcy have a statutory obligation to fulfil and part of that statutory obligation is to get in her assets for the benefit of her creditors. Irrespective of what other things the trustees have been doing, it seems to me that this is an appropriate step in the course of the bankruptcy.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Deputy Associate: Lauryn French

Date: 8 June 2010