Samootin v Official Trustee in Bankruptcy [2007] FCA 1618

FEDERAL COURT OF AUSTRALIA

Samootin v Official Trustee in Bankruptcy [2007] FCA 1618 IN THE MATTER OF ALEXANDRA SAMOOTIN v OFFICIAL TRUSTEE IN BANKRUPTCY NSD 2070 OF 2007

JACOBSON J

19 OCTOBER 2007

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALESDISTRICT REGISTRY 2070 OF 2007

BETWEEN: Alexandra Samootin

APPLICANT

AND: Official Trustee in Bankruptcy

RESPONDENT

JUDGE: Jacobson J

DATE OF ORDER: 19 October 2007

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The Official Trustee in Bankruptcy be substituted for the Insolvency and Trustee Service Australia as the Respondent to the application. 2. The application be dismissed. 3. The costs of the application be costs in the bankruptcy of Ms Samootin and be paid out of the bankrupt estate.

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 WALESDISTRICT REGISTRY 2070 OF 2007

BETWEEN: Alexandra Samootin

APPLICANT

AND: Official Trustee in Bankruptcy

RESPONDENT

JUDGE: Jacobson J

DATE: 19 October 2007

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 17 October 2007, I gave leave to serve short notice of an application made by Ms Samootin that afternoon. I set out the circumstances very briefly in a short ex tempore judgment that day. I made the matter returnable before me this morning at 10.15 am. Ms Nash, solicitor, has appeared this morning. She is instructed by the Insolvency and Trustee Service of Australia and handed up a notice stating that the respondent intends to oppose the application on a number of grounds. 2 First, Ms Nash states in the notice that the respondent should be the Official Trustee in Bankruptcy rather than the Insolvency and Trustee Service of Australia ('ITSA'). Ms Nash represents both ITSA and the Official Trustee in Bankruptcy. I think it is plain that the respondent should be the Official Trustee and I will make an order substituting the Official Trustee in Bankruptcy as the respondent, removing ITSA's name as respondent to the proceedings. 3 What I have been told this morning both by Ms Samootin and Ms Nash merely serves to confirm the observation made by Palmer J four years ago that this is a tragic case. However, that being said, it is not one which can be determined otherwise than in accordance with ordinary legal principles. The short answer to Ms Samootin's application is threefold. 4 First, her interest in the subject property vested in the Official Trustee in Bankruptcy when the sequestration order was made on 24 May 2006. 5 Second, the quantum of Ms Samootin's interest in the subject property has now been determined by the Supreme Court of New South Wales. 6 Third, the entitlement of Ms Samootin to remain on the property was conditional upon compliance with arrangements initially made with the registered proprietor, but subsequently formalised in an undertaking given to the Supreme Court of New South Wales and recorded in orders made by Hammerschlag J, initially on 17 July 2007 and corrected on 30 July 2007. 7 It is necessary to describe very briefly the background to what has obviously been lengthy, litigious proceedings involving not only Ms Samootin and her former husband but various other people. I will do so only in the briefest of terms necessary to dispose of today's application. 8 The decision of Palmer J, to which I referred on 17 October 2007, was reversed by a decision of the Court of Appeal of New South Wales and the matter subsequently came before Hammerschlag J in the Equity Division of the Supreme Court. 9 Justice Hammerschlag determined what was in essence an accounting of the respective interests of the relevant parties in the properties at 24 and 26 Oxford Falls Road, Beacon Hill. His Honour determined in light of the principles referred to by the High Court in Calverley v Green (1984) 155 CLR 242 that Ms Samootin and her former husband each held beneficial interests as to 15.2 per cent and that the remaining 69.6 per cent was beneficially held by Mr Deans. His Honour made a number of declarations and orders which I need not set out in any detail other than in the following respects. 10 One of the orders was that Ms Samootin allow to Mr Deans an amount of approximately $48,000 as the contribution to the mortgage payments made by Mr Deans since the date of the purchase of the property. 11 The other orders and undertakings are recorded in paragraphs 15 and 15A of his Honour's orders made on 17 July 2007 and subsequently corrected on 30 July 2007. It is appropriate that I set out both of those paragraphs in full: "15. Upon the giving of the undertaking by the Cross Defendant which is noted in Paragraph 15A hereof and for so long as the Cross Defendant complies with the terms of that undertaking, the writ is to lie in the Registry of the Court until further order of this Court of the discharge of the injunction granted on 21 April 1999 by the Family Court of Australia ("the injunction") whichever is the earlier. 15A. The Cross Defendant undertakes to the Court, which undertaking the Court accepts, that for so long as the writ of possession lies in the Registry in accordance with Paragraph 15 hereof, she will make and continue to make the following payments (i) the sum of $930 per month into the St George Bank mortgage account number 620003085. (ii) all Council rates levied from 17 July 2007 in respect of the property at 26 Oxford Falls Road Beacon Hill forthwith and upon presentation to her by the Cross Claimants of statements of account from the Council, and (iii) all water rates, electricity rates and gas rates levied on the said property as and when those amounts fall due for payment." 12 The undertaking recorded in paragraph 15A does not reflect any entitlement of Ms Samootin to remain in the premises as a tenant. It may also be incorrect to characterise it as an occupation fee. Nevertheless, it was an undertaking to the court to make payments which included contributions to the mortgage account on the property and this was done as a condition of Ms Samootin's entitlement to remain in the property. As I have said, she was not a tenant. Her rights were at best those of a licensee and were limited to the period of her occupation while an injunction, which had been ordered by the Family Court in other proceedings, remained on foot. 13 The rationale seems to have been that since there was an injunction restraining the sale of the property there was no utility in removing Ms Samootin from the premises and accordingly payments were arrived at and recorded in an undertaking to enable her to remain on the premises provided she satisfied the term of the undertaking and for so long as the property was the subject of the restraint ordered by the Family Court. 14 However, on 3 September 2007 Hammerschlag J handed down a judgment in the proceedings that were before him, that is to say Supreme Court of New South Wales proceedings 1973/01. His Honour noted that on 17 July 2007 he had declared that Loan Design Pty Limited (which was the former name of the registered proprietor of the adjoining land) was entitled to possession of the property known as 26 Oxford Falls Road, Beacon Hill. His Honour also pointed out that he granted leave to that company to issue a writ of possession. 15 Justice Hammerschlag referred in his judgment to the order and undertaking recorded in paragraphs 15 and 15A of the earlier orders. He observed that so long as Ms Samootin complied with the terms of the undertaking the writ of possession was to lie in the registry until further order of the court or upon discharge of the injunction that was granted in the Family Court of Australia as long ago as April 1999. That injunction restrained Mr Deans from dealing with the property. However, following upon those orders the Family Court dissolved the injunction on 17 August 2007. 16 That being so, the registered proprietor is at liberty to sell the two relevant properties. If and when that occurs it will enable the Official Trustee in Bankruptcy to obtain the proceeds referable to Ms Samootin's interest as declared by Hammerschlag J earlier this year. 17 In giving his judgment of 3 September 2007, Hammerschlag J observed that no substantive challenge to the declaration for possession or the grant of leave to issue it was or could properly be made. His Honour said that the matters put forth by Ms Samootin provided no basis for further delay with respect to the issue of the writ of possession. His Honour then observed that the writ was presently executable and may be enforced. Ms Samootin tells me that she is no longer living at the property but she does have her possessions located at those premises. 18 The substance of Ms Samootin's application is based upon her contention that Ms Nash entered into contracts on Ms Samootin's behalf allegedly in breach of the provisions of the Consumer Credit (New South Wales) Act 1995 (NSW). Ms Samootin submitted that she did not sign any mortgage and that it was not open to Ms Nash to agree on her behalf to make the payments recorded in the undertaking set forth in paragraph 15A of Justice Hammerschlag's orders. 19 In my view, Ms Samootin's submission must be rejected. It has to be borne in mind first that Ms Samootin's interest in the property has, as I have said, vested in the Official Trustee in Bankruptcy. Second, and perhaps more importantly for present purposes, the undertaking to which Hammerschlag J referred was given by Ms Samootin. There is no question in my opinion that Ms Nash entered into any contract on behalf of Ms Samootin. Accordingly it cannot be suggested that there was any breach of the Consumer Credit Act as contended by Ms Samootin this morning. 20 I think I should record as has been acknowledge by Ms Nash that Ms Samootin has in the earlier litigation cooperated with the Supreme Court and with the Official Trustee. She has also cooperated with the court today and put her submissions to me in short compass and in a way which enabled me to deal with her application in this ex tempore judgment today. 21 Despite, as I have said, and as acknowledged by Ms Nash, the tragic nature of the circumstances surrounding the proceedings, I think it is plain that I must make an order that the application be dismissed. 22 Ms Nash asks me to make an order that Ms Samootin, as a bankrupt, not issue any further proceedings in this court concerning property vested in the Official Trustee in Bankruptcy. It is true that from what I have seen thus far the matter does have a very long history and that there has been extensive litigation to date. Nonetheless I am not satisfied at the present time that it would be appropriate to make that order and I decline to do so. 23 Accordingly therefore, the order I will make is that the application be dismissed. 24 I should add by way of postscript that although Ms Samootin submitted that she was bound by the provisions of Order 7(1) of Justice Hammerschlag's orders, to which I referred above, to make a payment of approximately $48,000, the correct analysis of what took place is that this order was part of the accounting exercise carried out by Hammerschlag J in accordance with Calverley v Green.