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Anderson v Pongas & Ors [2011] FMCA 54 (3 February 2011)

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Anderson v Pongas & Ors [2011] FMCA 54 (3 February 2011)

Last Updated: 4 February 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ANDERSON v PONGAS & ORS

BANKRUPTCY – Application for sale of property and to vacate land – power to make orders – failure of bankrupt and other respondents to co-operate in sale of property.

Bankruptcy Act 1966 (Cth), ss.19(1), 30(1), 77(1)(e) and (g)
Federal Magistrates Court Rules 2001 (Cth), Schedule 1

Official Receiver v Fall (2008) 5 ABC(NS) 772; [2008] FMCA 489
Official Receiver v Tregaskis [2006] FMCA 1915

Applicant:
GARY JOHN ANDERSON AS TRUSTEE OF THE BANKRUPT ESTATE OF ANASTASIOS PONGAS

First Respondent:
ANASTASIOS PONGAS

Second Respondent:
DIMITRIOS PONGAS

Third Respondent:
NICKOLAS PONGAS

File Number:
PEG 98 of 2010

Judgment of:
Lucev FM

Hearing date:
3 February 2011

Date of Last Submission:
3 February 2011

Delivered at:
Perth

Delivered on:
3 February 2011

REPRESENTATION

Counsel for the Applicant:
Mr C Ko

Solicitors for the Applicant:
Brickhills, Barristers & Solicitors

The Respondents:
No appearance

DECLARATION AND ORDERS

(1) A declaration that the Applicant, the Second Respondent and the Third Respondent are the beneficial owners of the land described as Lot 59 on Plan 16750 being the whole of the land comprised in Certificate of Title Volume 1832 Folio 625 and known as Lot 59 Woodland Parade, Stake Hill (“Stake Hill Property”) as tenants in common in equal shares.
(2) In lieu of partition, the Stake Hill Property be sold.
(3) The Applicant have the sole conduct and control of the sale of the Stake Hill Property and be authorised to instruct an agent and/or auctioneer for that purpose.
(4) The Applicant be empowered to sign any contract of sale, transfer of land and any other documents on behalf of the Second Respondent and Third Respondent to give effect to the sale in the event that the Second Respondent and/or Third Respondent fail or refuse to sign such documents within such time as required by the Applicant and the Registrar of Titles is directed to accept such documents as having been duly executed by the Second Respondent and Third Respondent.
(5) The First Respondent, Second Respondent and Third Respondent do all such things as may reasonably be required by the Applicant, its selling agent, its solicitors or its other representatives for the purpose of achieving a sale of the Stake Hill Property including delivery up of the duplicate Certificate of Title for the Stake Hill Property.
(6) The First Respondent, Second Respondent and Third Respondent be prohibited from disposing of or otherwise dealing with the Stake Hill Property otherwise than in accordance with this order.
(7) The sale proceeds shall be held by the Applicant and applied in the following order of priority:
(8) The Applicant have liberty to apply on twenty four hours notice.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PERTH

PEG 98 of 2010

GARY JOHN ANDERSON AS TRUSTEE OF THE BANKRUPT ESTATE OF ANASTASIOS PONGAS

Applicant


And


ANASTASIOS PONGAS

First Respondent

DIMITRIOS PONGAS

Second Respondent


NICKOLAS PONGAS

Third Respondent


REASONS FOR JUDGMENT

(ex tempore reasons revised and edited)

Orders sought

  1. The applicant, Gary John Anderson as trustee in bankruptcy[1] of the estate of Anastasios Pongas, [2] today seeks orders for the sale and vacation of land against the Bankrupt, and the second and third respondents, Messrs Dimitrios and Nickolas Pongas, so that the Trustee may realise the assets of the Bankrupt’s estate for the benefit of creditors in accordance with the Trustee’s obligations and duties under the Bankruptcy Act 1966 (Cth).[3]
  2. The final orders sought are as follows:
  3. The Trustee relies on two affidavits sworn by him on 23 June 2010 and 1 February 2011. At hearing, the respondents did not appear, and did not seek to cross-examine the Trustee in relation to his affidavits. The Court, therefore, can take the facts as being, generally speaking, as asserted by the Trustee in his two affidavits.
  4. In the Trustee’s affidavit of 23 June 2010 the Trustee deposes as follows:
    1. on 8 June 2007, the Bankrupt became bankrupt and the Trustee, as a registered trustee, was appointed the trustee in bankruptcy of the Bankrupt’s estate;
    2. the Bankrupt, Dimitrios Pongas and Nickolas Pongas, are registered proprietors as tenants in common as to one undivided third share each of the land known as Lot 59 Woodland Parade, Stake Hill, in the State of Western Australia, which is more particularly described as Lot 59 on Plan 16750 being the whole of the land in Certificate of Title Volume 1832 Folio 625;[4]
    1. as a result of enquiries made in his capacity as trustee the Trustee knows that the person described as one of the registered proprietors of the Stake Hill Property, namely the Bankrupt, is one and the same person as Arthur Pongas, the Bankrupt as stated in the Trustee’s certificate of appointment;
    1. the Bankrupt’s interest in the Stake Hill Property has vested in the Trustee as Trustee of the Bankrupt’s estate;
    2. on 20 June 2007, the Trustee lodged a caveat over the Stake Hill Property in his capacity as Trustee of the Bankrupt’s estate;
    3. on or about 9 August 2007, the Trustee obtained an independent valuation of the Stake Hill Property by Hegney Property Valuations Mandurah which valued the Stake Hill Property at $525,000.00;
    4. the valuation report disclosed, and the Trustee verily believed, that the Stake Hill Property had been listed for sale for an asking price of $625,000.00 for a period of 1 month prior to the valuation report with limited interest. The writer of the valuation report also expressed an opinion, which the Trustee verily believed, that the asking price was in excess of the Stake Hill Property’s current market value;
    5. on 31 August 2007, the Trustee forwarded a letter to the Bankrupt advising him of the Trustee’s interest in the property as Trustee of the Bankrupt’s estate and requesting him to telephone the Trustee to discuss the matter, but the Trustee received no response;
    6. on 6 August 2008, the Trustee forwarded a letter to Dimitrios Pongas and Nickolas Pongas inviting an offer for the purchase of the Bankrupt’s interest in the Stake Hill Property but the Trustee received no response from either of them;
    7. on 24 November 2008, the Trustee forwarded a letter to Dimitrios Pongas and Nickolas Pongas seeking a response to his letter of 6 August 2008 and advising them that a court order may be necessary to sell the Stake Hill Property, but the Trustee received no response;
    8. on 28 July 2009, the Trustee forwarded a letter to the Bankrupt requesting the contact details of the selling agent for the Stake Hill Property, but the Trustee received no response;
    1. on 10 August 2009, the Trustee received a telephone call from Nickolas Pongas who said that the Stake Hill Property was listed for sale, but that no offers had been received. The Trustee said to Nickolas Pongas that he and Dimitrios Pongas should make an offer to purchase the Bankrupt’s interest in the Stake Hill Property. Nickolas Pongas said that he would discuss the Trustee’s suggestion with Dimitrios Pongas during the following week, and then contact the Trustee regarding an offer, or the re-listing of the Stake Hill Property for sale. The Trustee received no such contact;
    1. on 4 September 2009, the Trustee forwarded a letter to the Bankrupt advising him that unless the Trustee received an offer from Dimitrios Pongas and/or Nickolas Pongas to buy his interest in the Stake Hill Property by 18 September 2009 the Trustee would make an application to the Court for authority to sell the Stake Hill Property;
    2. on 7 September 2009, the Trustee received a telephone call from the Bankrupt who said that the Stake Hill Property would be re-listed on the market and that he would advise the Trustee of the selling agent’s contact details. The Bankrupt also said that he doubted that Dimitrios Pongas and Nickolas Pongas had the capacity or desire to acquire his interest in the Stake Hill Property;
    3. on 21 September 2009, the Trustee forwarded a letter to the Bankrupt reminding him that he said he would place the Stake Hill Property back on the market and advise the Trustee of the contact details of the selling agent;
    4. in or about October 2009, the Trustee searched the www.realestate.com website and identified that Harcourts Choice Realty was appointed as the selling agent of the Stake Hill Property;
    5. on 5 November 2009, the Trustee forwarded a letter to Harcourts Choice Realty requesting to be advised of any developments in the sale process of the Stake Hill Property but the Trustee received no response or notifications;
    6. on 17 March 2010, 31 March 2010 and 13 April 2010, the Trustee made phone calls to Harcourts Choice Realty each time leaving a message requesting that someone handling the sale of the Stake Hill Property call him back but the Trustee received no response;
    7. on 2 June 2010, the Trustee met with Dimitrios Pongas and Nickolas Pongas who offered to purchase the Bankrupt’s interest in the Stake Hill Property for $20,000.00 upon the basis that Dimitrios Pongas had contributed $60,000.00–$70,000.00 towards holding costs of the Stake Hill Property. The Trustee informed Dimitrios Pongas and Nickolas Pongas that their offer would be considered if they provided supporting paperwork, to which Nickolas Pongas responded that he would provide it to the Trustee by 8 June 2010. No supporting paperwork was received by the Trustee;
    8. on 2 June 2010, the Trustee made a telephone call to Leslie Nuttall, formerly of Harcourts Choice Realty, who was now the real estate agent with Ray White Ballajura for the Stake Hill Property. Ms Nuttall informed the Trustee that the Stake Hill Property, which was vacant land, was listed for sale at $599,000.00 but that other comparable properties with a house had sold for $625,000.00 which indicated that the Stake Hill Property’s true value was about $450,000.00;
    9. the Trustee verily believed that:
      1. the listing price for the Stake Hill Property was unduly excessive and that unless it was lowered it was highly unlikely that the Stake Hill Property would be sold within a reasonable period of time, or at all; and
      2. unless the Trustee obtained control of the sale of the Stake Hill Property it was highly unlikely that arrangements would be made to lower the listing price of the Stake Hill Property or that Dimitrios Pongas and/or Nickolas Pongas would acquire the Stake Hill Property, and therefore the Trustee would not be able to realise the assets of the Bankrupt’s estate; and
    1. the lack of co-operation from the Bankrupt, Dimitrios Pongas and Nickolas Pongas, and the listing agent and the unduly excessive listing price of the Stake Hill Property has caused significant delay in the sale process and as a result has increased costs in the administration of the Bankrupt’s estate to the detriment of the Bankrupt’s creditors.
  5. In the Trustee’s affidavit of 1 February 2011 the Trustee deposed to the following:
    1. the Stake Hill Property has been listed for sale with Ray White Ballajura for the past 6 to 9 months;
    2. the Trustee has been speaking to the real estate agent, Mr Gary Brazenor of Ray White Ballajura regularly, and has been informed, and verily believes, that during this time the listing price has dropped from $599,000.00 to $349,000.00 as there has been little interest in the Stake Hill Property;
    1. on or about 17 January 2011 the Trustee was informed by Mr Brazenor and verily believes that Mr Brazenor had received a verbal offer of $300,000.00 on the Stake Hill Property and another agent had come in with a $270,000.00 cash offer however Dimitrios Pongas and Nickolas Pongas wanted to counter-offer at $400,000.00, which the Trustee notes is even higher than the listing price;
    1. the Trustee verily believes that Dimitrios Pongas and Nickolas Pongas are being unreasonable in attempting to sell the Stake Hill Property, and that unless the Trustee obtains control of the sale there will be no certainty as to when, how and whether the Stake Hill Property will be sold; and
    2. creditors of the Bankrupt’s estate have lodged proofs of debt making claims in the estate totalling approximately $178,000.00, and the Trustee will need to realise the assets of the Bankrupt’s estate to finalise the administration of the estate for the benefit of creditors.
  6. From the Bar Table this morning, Mr Ko quite properly informed the Court that his instructing solicitors had received from the real estate agent this morning an email indicating that there is now an offer for $325,000.00 submitted in relation to the Stake Hill Property, which offer is not unconditional and is reliant on some form of finance. Mr Ko informs the Court that if the offer is a legitimate offer, the Trustee would not necessarily seek to disturb that offer in any way.
  7. This application was filed on 24 June 2010. It first came before the Court on 16 July 2010, when, at the request of the Trustee with the concurrence of Dimitrios Pongas and Nickolas Pongas (who were then represented by Counsel), the matter was adjourned to 20 September 2010. On 20 September 2010 the Court made orders for the respondents to file and serve a notice of grounds of opposition to the application and an affidavit in support of those grounds on or before 11 October 2010. No notice of grounds of opposition to the application or affidavit in support has been filed by any of the respondents.
  8. At the hearing today the respondents have not appeared and no explanation for their non-appearance has been provided to the Court.

Consideration

  1. Section 19(1) of the Bankruptcy Act relevantly states that:
  2. Under s.19 of the Bankruptcy Act the Trustee has a duty to recover the Bankrupt’s property for the benefit of the Bankrupt’s estate and the Bankrupt’s creditors.[5]
  3. Section 30(1) of the Bankruptcy Act states that:
  4. Section 77(1)(e) and (g) of the Bankruptcy Act state that:
  5. The Court has jurisdiction to make the orders sought in the application under ss.30 and 77 of the Bankruptcy Act and to make those orders in the absence of the Bankrupt and other respondents.[6]
  6. The Trustee wishes to have the sole conduct and control of the sale of the Stake Hill Property in order to fulfil his duties in realising the assets of the Bankrupt’s estate. It is appropriate that the Trustee have that conduct and control for the following reasons.
  7. The Bankrupt has failed to do all such acts and things in relation to the realisation of the Stake Hill Property and to aid the Trustee in the administration of the Bankrupt’s estate as required by s.77(1)(e) and (g) of the Bankruptcy Act.
  8. The failure of the Bankrupt and Dimitrios Pongas and Nickolas Pongas to respond to various correspondence to them, and their failure to notify the Trustee as to their willingness to offer to purchase the Bankrupt’s share in the Stake Hill Property or co-operate in the sale of the Stake Hill Property, has caused significant delay and increased costs in the administration of the Bankrupt’s estate. Further, setting by the Bankrupt and Dimitrios Pongas and Nickolas Pongas of unrealistic listing prices to sell the Stake Hill Property, and the making by them of an unrealistic counter-offer at over the listing price, has hampered the real estate agent’s efforts to try and legitimately sell the Stake Hill Property.
  9. The conduct of the Bankrupt, and of Dimitrios Pongas and Nickolas Pongas, is such that the Court concludes that if the Trustee is obliged to rely on their co-operation in the sale of the Stake Hill Property there would be delays and costs likely to be incurred in the administration of the Bankrupt’s estate to the prejudice of the estates’ creditors, and there would be uncertainty as to when, how and whether the Stake Hill Property would be sold.[7]
  10. The Court remains of that view, notwithstanding the information provided as to the most recent offer of $325,000.00, apparently submitted recently. The Court does not propose to stay the orders that it proposes to make in relation to this matter, so as to allow time for the $325,000.00 offer to complete. The proposed orders allow the Trustee sufficient flexibility to allow the sale process on the $325,000.00 offer to complete, with or without input from the Trustee. If, however, the $325,000.00 offer does not complete, or there are difficulties in its completion, the proposed orders provide the Trustee with the necessary power to deal with the matter and the completion or otherwise of the sale appropriately.
  11. The Bankrupt, and Dimitrios Pongas and Nickolas Pongas have not filed any notice of grounds of opposition, nor any affidavits, in opposition to the application, despite being ordered to do so, and there is nothing before the Court preventing it from making the orders sought in the application.

Conclusion

  1. In the circumstances the Court is satisfied that it ought to make a declaration and orders in terms of proposed orders 1 to 7 of the final orders sought by the Trustee, save that there will be an amendment to proposed order 7(d) to insert costs, and disbursements, fixed in accordance with Schedule 1 of the Federal Magistrates Court Rules 2001 (Cth), and also there will be an order that the Trustee have liberty to apply on an urgent basis. That order is made to facilitate the Trustee’s access to the Court in the event that the respondents cause any difficulties in relation to implementation or carrying out by the Trustee of the Court’s orders.

I certify that the preceding 20Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !twentytwenty (20) paragraphs are a true copy of the reasons for judgment of Lucev FM


Date: 3 February 2011

[1] “Trustee”.
[2] “Bankrupt”.
[3] “Bankruptcy Act”.
[4] “Stake Hill Property”.
[5] Official Receiver v Fall (2008) ABC(NS) 772 at 776 per Lucev FM; [2008] FMCA 489 at para.9 per Lucev FM (“Fall”); Official Receiver v Tregaskis [2006] FMCA 1915 (“Tregaskis”).
[6] Tregaskis at para.12 per Lucev FM; Fall at 777 per Lucev FM; FMCA at para.19 per Lucev FM.
[7] Fall ABC(NS) at 777 per Lucev FM; FMCA at para.18 per Lucev FM; Tregaskis FMCA at para.24 per Lucev FM.

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