CATCHWORDS Bankruptcy - Notice of Opposition - Ability of debtor to pay debts as they fall due - Interest as joint tenant in matrimonial home - Whether such interest a "readily realizable asset". BANKRUPTCY ACT 1966 s.52(2) (a), LAW OF PROPERTY ACT (S.A) 1936 ss.69(1), 69(2), 70 RE: MR. N. D'ONOFRIO EX PARTE: ROBERT GEORGE BLYTH the debtor the creditor Fisher J. Adelaide 19 September 1983 LN THE FENERAL COURT OF AUSTRALIA GENERAL DIVISION )SOUTH AUSTRALIA TN1atTRICT REGISTRY 9 } ) ) BANKRUPTCY WISTRICYT GF THE STATE OF) } SOUTH AUSTRALIA ) Ke BE: Parte No. 440 ef 1982 MR, NIU' ONOQERIO the deblor : EOLERT GEORGE BLYTH the creditor ORDER JUDGE MAKING GRDERX : HATE WHERE MALE THE COURT ORDERS THAT: 1. The motice of opposition of Mr. N. Fisher J. 19 September 1965 Adelaide Tlvonofria to the making of H sequestration order against ois estate 15 dismissed. Nr. dN. D'onafria as t the pecitioning creditor, the same Lo pay the cos te of Robert heorgqe Blyth, 10 be banned if mot agreed. IN THE FEUERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISLRICLT REGISTRY ) ) ) } GENERAL THIVISLON > No.440 of 1983 ) LANKRUPTCY DISTRICT OF THE STATE oF) ) ) SOUTH ALSTRALTA Re : oR.N. L'GNOFRIO tie debtor Ex Parte IRUKERT GEORGE BLYTH tne creditor 19 September 1983 REASONS FOR JUDGMENT FISHER J.: In this matter Robert George Blyth ("the petitioning Creditor®) seers a sequestrabion arder against the estate af Mr. N.0/Gnofrie ("the debtor") besed on 3 Judgment debi an the sum of $1,727.30. The debtor oppoetes the making of the order on the ground set out in a notice of opposition, namely that he is ftolivent. The matter has proceeded on the basis that he is contending, 1m the words oF §,55¢2)¢8) of the Bankruptey Act 1946 ("the Act") that he can satisfy me that he 1s able to pay his debtbs. In Wis sifidayvit failed ain supporlk of his motice of opposition the debtor stated his assets 4s money im the bank 455.83, a Ford Falcon sedan which he valued at €600 and an interest as joint tenant with his wife in 2 duelling-house. This house was occupred as Lhe matrimonial home by the debtor, his wife and Lwo elependent children. By consent Lie debtor tendered a certificate by a licensed valuer valuing the dwelling-house at $72,500 and andacating that 1t could be sold within 2 period of four weels from instructions. 1b was also established that the house was mortgaged to the Commonwealtn Rant of Gustrsalis to secure $5,807.87 om a housing loan. The debtor 15 employed a5 a meat process worker with gross wages of $257 per week. He hus no creditears other than the Commonvealth Bank and the judgment debt, and his only outgoings are household expenses, rates and taxes and mortgage repayments. The debtor gave evidence at the mesring whach confirmed the facts deposed to in his af fadavil except that he said that the household furniture was the property of his wife, whereas in his affadavit he claimed that 1% was owned jgoinbly by them. The monthly payments under Lhe mortgage were $160 and he ssid that ne was unable to borrow 5 further amount oan the security of his dwejlang-house ta pay the petitioning creditor. The matter proceeded on the basis that he sould not obtain money by "martgage or pledge of his aszete within 3 reletively short time® d. (see Sandel] ov Forter and Another (1966) 115 C.L.R. 666 3t page 670. However counsel for the Jottor cantended that I should be satisfied that he was able to procure money to pay his debts by realisation by sale of his assets, namely his interest im the dyelling-nouse within a relatively shork dime. As 1s apparent counsel relied woon and accepted ae spplicable the text stated by Farwick C.d. an Samdell v Porter supra ab page 679 as follows: "Insolvency 15 @xXp.essed in 2.95 as arm inshilaity to pav debts as they fall due out of the debtor's awn money « But Lhe debtor's own moneys are not lLinited to his eash resaqurces immediately avallable. They extend ta moneys which he can procure by realisation by sale or by mortgage or Pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, auncludaing the nature of the bisiness, of the debtor." The debtor however ais not the sole owner of the dwellang-house but only of an undivided mo1ety therein, There 1s no evidence before me =5 to the amount which could be realised by sule of such am interest, even assuming that 24 35 marketable and there 35 no evidence of Lhe Length of time 1t would take to sell this anterest. All of the evidence is as ty the market value of and the time at would take to sell the dwelling-house, The deblor 93ve evidence to the effect Llhis his wife was strangly Opposed ta the ple of the family home and that they had na an alternative secomodatiron. Despite this state of affaires, counsel for the debtor contends that his client 15 to be taken as solvent ab becauee he has an Tumassailtable right" to compel a sale and division of vhe proceeds thereof between his wife and himself. Tt wae said that he therefore should be considered as being mnotionally able to procure moneys by realination, of his assets wathin a relatively shark time. However, in my opinion the interest of the debtor in the dwellaing-howse 25 moby an the words of Neednam J. in Expo International Pty. Ltd. v Chank C1979] 2 N.S.W.L.R. 620 st page 839, a 'resdily realansble asset", sssuming 1t is realasable at all. Both counsel sccepted that I should determine the matter in sccordance with the text enuncialed by Barwick C.J. in Sandell v Porter amd Another, even thougn tne statutory provision there under consideration was "inability ta pay debts as they fall due* out of the debior's own money. Counsel for ihe debtor based his eontentions almoet exclusively upon the debtor's right to apply to the Supreme Court for a partition or sale of the dwellang-houce and division of the praceeds of such sale. This right was originally provided by the old Partition Act 1881 and 215 maw vo he found am 8.69 and ¢.70 of the Law of Froperty Act (3.8.) 19396. The essential provisions are as follows: 69. (1) Gn amy application for partition the court may order a partition of tne said Land or other prepesrty, and may give all necessary or proper conseqguentis] directions. (2) Qn any such spplication if 2b appears ta the court that, by reason of the nature of the property, or of the number of the parties interested or presumptively aunterested therein, or of the absence or disability of some of those parties, or of any other circumstance, a sale of the property and 8 distribution of Lie proceeds would be more benefieirsl for the parties antlerested than oa division of the property between or among Lhem, the court may, aif 16 thinks fal, on the request of any of the parties interested, and nmotwitnhstanding the shsence, dissent or disabality of any others of them, cirect 3 sale of the property accordingly, and may give all necessary or proper consequential directions. 70. Gr any application for partition, sf the party or parties anterested individually or collectively, to Une extent of one moiety or upwards in the property, request the court to direct a sale of the property and a dastrabution of the proceeds, instead of a wdavaision of the property between or among the parties interested, the court shall, unless it sees Qo0d reason to the contrary, direcl a sale of the property accordingly, amd shall give all necessary or proper consequential directions," It was accepted thakb yuclicial decisions have determined thal, notwithstanding the woeds 'unless 41at sees good resson to the contrary' the applicant has in the circumstances an absolute right to sale, motwilhstanding his wife's strong opposition thereto. Yne court's discretion as lamited to deferring for a tine the implemenling of the order for sale (see Peck v Peck £19651 $.4.S.R. 293 si page 300). in circumstances such as the present where the court 21s considering the home im which the wite and dependent chijidren reside, there could hardly be a stronger case for deferring the sale ss loamy as possible. Thus at can not be said that the duelling-nouse 1s readily realizable or can be realised "within a relatively short time'. In Bank of Australasia v Hall (1907) 4 C.L.R. 1514 st pzge 1543 Issacs J. used the following words as indicating the state of reslisabilaity requiced, manely "lf thab property 1s in such a position as to title or otherwise that it could be realised im time to meet the indebtedness as tine claims mature." Jt can nol be contended that an asset which will not be sold until 8 court enercizes its discretion to direct a sale is ino am appropriate 'position as vo tities or otherwise'. As Riley 3. said ain Re Mottee (1977) 29 F.L.R. 406 at 412 in reference to the sale of a half aunterest ss joint tenant am the matrimonial home "ihe realisation of that interest was at the time a renote prospect". There 15 however an even more difficult hurdle for the debLlor to surmount, mamely the likely famitation on the jurisdiction of the Supreme Court to order a ssle of the dweljing-house. in Tansell vy Tanseil (1978) 19 S.A.S.R. 165 two of the judges of the Supreme Court of South Australia was of the @pinion that they had na jurisdiction under the Law of Property Act 1926 aif proceedings were anitiated in the Family Court for exercise af its powers and ain particular ats powers under s.114 of Lne Family Law Act 1975. As Kray C.J. s31d on page 173 "T cannot hank that Lhe Federat Farliament could have antended either that there should be concurrent proceedings im the State and Federal courts leading to diametrically Opposed conclusions or that a spouse who 15 faced with the prospect of the matrinvonial home berzng sold over his or her nfead, albeat wn sccordance with legal title, should be without the redress whien he or she formerly enjoyed, 3b Lleasl when an arguable ease of fault gustafying prauncipsal matrimonial relief could have been presented to the Court. "I I hold then, that the yuraisdiction of this Court will be ousved by a valid application ta the Family Court affecting the subject matter of the present application." This view 15 sufficiently in accord wath thal of Jacobs J. on page 191 of Tansell v Tansell 4o satisfy me that am application by the wafe of the debtor ta Yhe Family Court would deny the Supreme Court jurisdiction to entertain the debtor's action in the Supreme Court. On the evidence before me I must accept that the wife would do everything possible to prevent a sale. The Supreme Court would in the carcumstances almost certainly stay tne deblor's applicatson Lo give her an opportunity to proceed in The Family Court. in thas malter I am only required to be satisfied by the debtor that ne can procure money within 3 short period of time. I need mot look further into the procedural aspects of the manner 2m which the wife could approach the Famaly Court. The debtor has failed to c¢atisfy me that he has a readily realisable asset which is available to pay his debts. In fact he has mot convineed me that I should accept that he, as the owner of an undivided mo1ety sn the matrimonial home, hes a rezlicahle asset. This notice of opposition must be dismissed with costs. 1 certify that this and the 6 preced: < pages are a true copy of the Reasons tv Judgment of Mr. Justice Fisher . fete EF Aleka de Associate Dated: 19-9. 83. d.