FEDERAL COURT OF AUSTRALIA Cottrell v Nicholls (Trustee) in the matter of Cottrell (Bankrupt) [2004] FCA 358 DAVID M COTTRELL v ALAN NICHOLLS (AS TRUSTEE IN THE ESTATE OF DAVID M COTTRELL A BANKRUPT) N 399 of 2004 ALLSOP J 25 March 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 399 of 2004 BETWEEN: DAVID M COTTRELL APPLICANT AND: ALAN NICHOLLS (TRUSTEE) RESPONDENT JUDGE: ALLSOP J DATE OF ORDER: 25 March 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for interlocutory relief contained within the application filed on 22 March 2004 be dismissed. 2. The applicant, Mr Cottrell, pay the respondent's (that is, Mr Nicholls') costs in respect of the application for interlocutory relief. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 399 of 2004 BETWEEN: DAVID M COTTRELL APPLICANT AND: ALAN NICHOLLS (TRUSTEE) RESPONDENT JUDGE: ALLSOP J DATE: 25 MARCH 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In this matter (number N399 of 2004) Mr David Mervyn Cottrell as applicant seeks various orders in an application filed in the Registry on 22 March 2004. On the second page of the application there is a claim for interlocutory relief, those claims for interlocutory relief: first, for an order that Mr Cottrell's trustee in bankruptcy, the respondent Mr Nicholls, cease advertising a property called Callatoota at Boree Creek Road, Urana, New South Wales for sale. I will refer to this as "the Property". The second order sought is that Mr Nicholls remove the property from sale. The third order sought is that the auctioneer, Mr Smith not proceed with the auction, which is listed to take place tomorrow, Friday, 26 March at 4 pm at the Urana Bowling Club. 2 In reasons delivered by me on 27 February 2004, I set out a history of most of Mr Cottrell's applications in this Court and their fate. Subsequent to 27 February 2004, I made orders on 16 March 2004 with some short reasons. Yesterday, it was drawn to my attention by a Registrar that there may have been one error in those orders made on 16 March: I will come to that shortly. 3 As a reading of my reasons of 27 February 2004 makes clear, orders were made by Registrar Tesoriero on 29 November 2000 that there be a sequestration order in relation to the estate of Mr Cottrell. Mr Cottrell sought review of that order. That matter came before Conti J, who dismissed the application. The appeal from Conti J's order was successful and the matter was remitted to Conti J. Conti J then made another sequestration order. I dealt in my earlier reasons with the appropriateness or not of that form of order. Mr Cottrell has put adamantly in submission before me and in writing that the effect of the first successful appeal from Conti J's order was to set aside the sequestration order made by Registrar Tesoriero. It had no such effect. It set aside Conti J's order. The matter was remitted to him to rehear according to law the review application which was before him. He did so. He made another sequestration order. 4 As I sought to point out in my reasons of 27 February, that causes its own difficulty. Discerning what I saw to be the plain intent of his Honour, I vacated that order and put in its place the order that his Honour plainly had the intention to make, that was to affirm Registrar Tesoriero's order, which had never been set aside. This procedure was intended to regularise what was the plain position that there was, and could only be on the material, one sequestration order, that made by Registrar Tesoriero. 5 Earlier in these reasons I referred to an error in the orders that I made on 16 March. That error was that I referred to order 1 being made by Conti J on 19 September 2001. His Honour heard the matter on 19 September 2001 and made orders on 21 September 2001. That error having been pointed out to me yesterday, on 24 March 2004, I varied my order made on 16 March by substituting 21 September for 19 September in order 2 in those orders of 16 March 2004. 6 The relief sought by Mr Cottrell today is supported by four affidavits and one bundle of documents. The bundle of documents would, if it had not been faxed, have been intended to be annexures to one of the affidavits. There is no difficulty in dealing with the matter as a separate exhibit. I should add that it was plain in my earlier judgment and from other judgments of other Judges of the Court, that Mr Cottrell is disabled. He is unable to come to Court and has conducted his case over the telephone with facsimile documents before the Court. I am satisfied from what has passed in the hearing this afternoon that there has been no misunderstanding as to the documents which Mr Johnson and myself are working from. 7 The four affidavits are, first, one sworn on 16 January 2004 and filed in proceedings numbered N76 of 2004, which I have read in these proceedings. The second is an affidavit sworn on 22 March 2004 but dated on the first page 15 March 2004 and filed in these proceedings. The third is an affidavit not formally filed, which I will have stamped and filed in Court today also sworn on 22 March; it says 2003, but I think that is a typographical error and should be 2004. It is dated on the front page, 16 March 2004. The fourth affidavit is sworn on 22 March 2004 and has on the front page, 18 March 2004. The bundle of documents, which is Exhibit A, has a number of documents some of which I will make reference to. 8 The application before me is really made, as I discern it, on three bases. The first is a general re-agitation of the issues that I substantially dealt with in my reasons for judgment of 27 February and in my orders of 16 March. That basis is that Registrar Tesoriero's order has either been set aside or should be annulled or should somehow be dealt with in a manner otherwise than recognising it as a sequestration order. I do not propose to rehearse the chronology in relation to that. The chronology is set out fully in my reasons of 27 February 2004. The orders of Registrar Tesoriero have been reviewed twice by Conti J. On the first occasion his Honour's orders were set aside. On the second occasion they were not. So, I do not propose to make any orders today on the basis somehow that the sequestration order made by Registrar Tesoriero affirmed now by Conti J through my variation to his order should somehow be set aside or seen as vulnerable. 9 The second basis for the interlocutory orders sought today is, in substance, an application for a stay of associated matters pending the appeal from my orders made on 16 March read together with my reasons of 27 February. The property in question is not owned by Mr Cottrell. It was transferred to him apparently in 1996. Some time apparently in October 1997 he agreed to transfer the property to his sister. The trustee has served a notice under section 139ZQ of the Bankruptcy Act 1966 (Cth) upon Ms Grant, Mr Cottrell's sister. The trustee claims a charge over the property pursuant to s 139ZR. The claim is made, though I do not have the notices before me, that the transfer of the property from Mr Cottrell to his sister was vulnerable to attack under either or both ss 120 and 121 of the Bankruptcy Act. 10 I do not see any reason why the appeal from my orders regularising Conti J's judgment should found any argument that steps should not be taken by the trustee in the conduct of his management and finalisation and conduct of the estate. Therefore I refuse to make any orders today based on that second broad ground. 11 The third broad ground is the attack by Mr Cottrell on the validity of the notices and the rights of the trustee to claim an interest in the property or a charge over the property or any right to sell the property by reason of claims under sections 120 and 121 of the Bankruptcy Act. Mr Cottrell strongly relies on the evidence that he has led today that the Registrar-General has indicated in evidence that Mr Cottrell lodged the transfer to him from the previous vendor in 1996. That can be accepted for the purposes of today. 12 Mr Cottrell, in proceedings in this Court late last year in matter number N1976 of 2003, sought relief in relation to those notices. This is a proceeding, which I did not touch upon in my reasons of 27 February 2004. In that, Mr Cottrell, but not his sister Ms Grant, sought and seeks orders under section 139ZS of the Bankruptcy Act to set aside the 139ZR notice. An application was filed on 17 November 2003, as was an affidavit of November 2003. Those proceedings came before Branson J on 19 November 2003, on which date her Honour disposed of an application for an interlocutory order restraining the sheriff from placing Mr Nicholls in possession of Lot 361, Deposited Plan 756447, which is the property in question. I do not propose to advert to the material referred to by her Honour, save and except to note that in paragraph 17 of her Honour's reasons, her Honour said that she was not satisfied that there was a serious issue to be tried as to the validity of the notice. 13 I should also add that on 2 October 2003, Assistant Registrar Howe of the Supreme Court of New South Wales in the Common Law Division dismissed a notice of motion brought by Ms Grant and Mr Cottrell to set aside or vary the default judgment for possession of the property which had been obtained. What Mr Cottrell now seeks is an interlocutory order in further proceedings restraining the sale of the same property within the conduct of the administration by the trustee. 14 In relation to the material provided to me today, Mr Cottrell indicated the further and fresh information, which was before the court today that was not before the court when her Branson J dealt with the matter last November, was the evidence of the attitude of the Registrar-General. That information, that Mr Cottrell became transferee and owner some time in 1996, does not advance the matter as to whether or not the trustee's rights against the property should be, in effect, frozen pending the disposition of matter of N1976 of 2003; that is the application to set aside the notices under section 139ZQ of the Bankruptcy Act. 15 In all those circumstances I see no arguable basis whatsoever to restrain the trustee or the real estate agent tomorrow dealing with the estate in the manner proposed and I propose to dismiss the application for interlocutory relief. 16 I order the applicant, Mr Cottrell, to pay the respondent's costs. 17 Mr Wilcox, the original petitioning creditor, is named on the face of the application, though it is not clear that he is intended to be a party. I have not had Mr Wilcox called. There is no evidence of service on Mr Wilcox. There will be no order for costs in his favour. He has not attended. He probably does not know of the proceedings. 18 The orders of the Court are: 1. The application for interlocutory relief contained within the application filed on 22 March 2004 be dismissed. 2. The applicant Mr Cottrell, pay the respondent's (that is, Mr Nicholls') costs in respect of the application for interlocutory relief. 19 I refer the application, being matter number N 399 of 2004, to the Registrar for allocation to a docket Judge. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 14 April 2004 The Applicant appeared in person by telephone. Counsel for the Respondent: Mr G T Johnson Solicitor for the Respondent: Ms S Nash Date of Hearing: 25 March 2004 Date of Judgment: 25 March 2004