Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost (No 2) [2011] FCA 686

FEDERAL COURT OF AUSTRALIA

Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost (No 2) [2011] FCA 686 Citation: Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost (No 2) [2011] FCA 686

Parties: JOHN SHEAHAN (TRUSTEE OF THE BANKRUPT ESTATE OF ALLEN GORDON FROST) v ALLEN GORDON FROST and PAUL ANTHONY RICHARDSON

File number: SAD 185 of 2009

Judge: MANSFIELD J

Date of judgment: 21 June 2011

Catchwords: BANKRUPTCY – consideration of s 121(5) of the Bankruptcy Act 1966 (Cth)

Legislation: Bankruptcy Act 1966 (Cth) s 121(5) Bankruptcy Legislation Amendment Act 1996 (Cth)

Cases cited: Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost [2011] FCA 356 cited

Date of hearing: 10 May 2011

Date of last submissions: 10 May 2011

Place: Adelaide

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 35

Counsel for the Applicant: G Gretsas

Solicitor for the Applicant: Gretsas & Associates

Counsel for the Respondents: G Dart

Solicitor for the Respondents: Paul Richardson

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 185 of 2009

BETWEEN: JOHN SHEAHAN (TRUSTEE OF THE BANKRUPT ESTATE OF ALLEN GORDON FROST)

Applicant

AND: ALLEN GORDON FROST

First Respondent

PAUL ANTHONY RICHARDSON

Second Respondent

JUDGE: MANSFIELD J DATE OF ORDER: 21 JUNE 2011 WHERE MADE: ADELAIDE

THE COURT DECLARES THAT:

1. Ambrose Baker & Partners (Holdings) Pty Ltd holds the property comprised and described in Certificate of Title Register Book Volume 1822 Folio 199 being the land situate at 252 Angas Street, Adelaide, in the State of South Australia, as registered proprietor of the fee simple in its own right and not as a trustee. 2. The one of two issued shares in Ambrose Baker & Partners (Holdings) Pty Ltd held in the name of Allen Gordon Frost at the time of his bankruptcy on 4 September 2000 vested in John Sheahan in his capacity as trustee of the bankrupt estate of Allen Gordon Frost. 3. Mortgage No. 8645792 dated 27 January 1999 registered on Certificate of Title Register Book Volume 5579 Folio 181 and granted to Paul Anthony Richardson in respect of land situate at 29 Mayflower Crescent, Hallett Cove in the State of South Australia (the Mayflower Crescent Property) is void against John Sheahan in his capacity as trustee of the bankrupt estate of Allen Gordon Frost pursuant to the provisions of s 121 of the Bankruptcy Act 1966 (Cth). 4. Mortgage No. 8843522 dated 1 February 2000 registered on Certificate of Title Register Book Volume 5579 Folio 181 and granted to Paul Anthony Richardson in respect of land situate at 29 Mayflower Crescent, Hallett Cove in the State of South Australia is void against John Sheahan in his capacity as trustee of the bankrupt estate of Allen Gordon Frost pursuant to the provisions of s 121 of the Bankruptcy Act 1966 (Cth). AND THE COURT ORDERS THAT: 5. Allen Gordon Frost be at liberty to purchase for the sum of $145,000 (free of encumbrances, to the extent that they are invalid as against John Sheahan) the half interest held by John Sheahan in the Mayflower Crescent property (by reason of John Sheahan being the trustee of the bankrupt estate of Allen Gordon Frost) by indicating in writing to John Sheahan at his address for service in these proceedings by 19 July 2011 that he accepts the offer made by John Sheahan in Court on 10 May 2011 to sell to him the said half interest for $145,000, and by paying the said sum of $145,000 (subject to all proper adjustments for payments made in respect of rates, taxes and other routine outgoings) at settlement within 28 days of the written acceptance of that offer in exchange for a duly executed transfer by John Sheahan of the one half interest in the Mayflower Crescent property. 6. If Allen Gordon Frost does not give the written notice referred to in Order 5 hereof by 19 July 2011 or, having given such notice, does not pay the purchase price at settlement in accordance with Order 5 hereof, then: (a) the Mayflower Crescent property is to be sold in accordance with the timetable and terms set out in this Order; (b) the sale is to take place through a licensed land agent who shall be appointed by written agreement between John Sheahan and Allen Gordon Frost, or in default of agreement, each of John Sheahan and Allen Gordon Frost shall nominate in writing in a letter to the Registrar of the Court, with a reference to this proceeding, two licensed land agents accompanied by a letter from each nominated licensed land agent setting out the recommendation for the means of selling the said property, and the fees of the licensed land agent and any other anticipated costs for doing so, and indicating whether that licensed land agent has had the opportunity of inspecting the said property and setting out any recommendations of that licensed land agent for any work to be carried out to the said property for the purpose of securing the best price reasonably obtainable for the said property and a rough estimate of the cost of having such work carried out and the time it is anticipated for such work to be carried out; (c) for the purposes of Order 6(b) Allan Gordon Frost shall provide reasonable access to the said property during normal business hours upon two days written notice so that each of the two licensed land agents proposed to be nominated by John Sheahan may inspect the said property and, following such inspection, each of them may revise any letter referred to in Order 6(b) following such inspection; (d) the nominations and letters referred to in Order 6(b) hereof shall be provided to the Registrar of the Court, who shall then make a recommendation (the recommendation) to the Court about the appointment of a licensed land agent to sell the said property and the terms of the sale (including as to any work to be done to the said property before the sale) and shall by letter send the recommendation to John Sheahan and Allen Gordon Frost, and unless either of them indicates within three days of the date of that letter by letter to the Registrar that they do not accept the recommendation, the recommendation shall become a direction of the Court appointing the licensed land agent in terms of the recommendation and if either of them gives such notice the Registrar shall arrange a directions hearing for the purpose of hearing the parties before the appointment of a licensed land agent to sell the Mayflower Crescent property; (e) Allen Gordon Frost shall grant to the licensed land agent so appointed access to the Mayflower Crescent property upon the provision of reasonable notice and during normal working hours for the purpose of inspecting and photographing the Mayflower Crescent property in preparation for its listing, marketing and sale; (f) if the licensed land agent recommends the expending of any monies towards the repair, cleaning, landscaping, painting or general maintenance of the Mayflower Crescent property (the works) in preparation for its listing, marketing and sale, then Allen Gordon Frost and John Sheahan shall provide notice to the other of the details of the works and shall retain and provide to the other party copies of all invoices and receipts in connection with the works (the costs of the works); (g) the Mayflower Crescent property is to be offered for sale by public auction or as the licensed land agent has recommended to be effected no later than four weeks after the appointment of the licensed land agent or, in the event that the works are undertaken, within four weeks from the completion of the works; (h) the advertising budget for the marketing of the Mayflower Crescent property shall be in the sum of $3600 or such lesser sum as the licensed land agent shall have determined; (i) the reserve price shall be the sum of $290,000.00 or such other sum as agreed to in writing by John Sheahan and Allen Gordon Frost; (j) if the Mayflower Crescent property is to be offered for sale by public auction, and in the event that the Mayflower Crescent property is not sold within 60 days of the date the four week period fixed under Order 6(g) hereof, it may be sold for the sum of $270,000.00 or such other sum as agreed to in writing by John Sheahan and Allen Gordon Frost; (k) in the event that the Mayflower Crescent property is not sold within 90 days of the said date then either party may re-list the matter for further directions; (l) in the event that the Mayflower Crescent property is sold, the net proceeds of sale shall be applied as follows: (i) the agreed commission to the licensed land agent; (ii) the reasonable disbursements of the licensed land agent including any advertising and marketing costs and the fees and disbursements of any conveyancer duly appointed, in accordance with the recommendation; (iii) a sum of money to John Sheahan or Allen Gordon Frost by way of a full reimbursement of the cost of the works; (iv) as to 50% of the balance of the sale proceeds, to John Sheahan as trustee of the bankrupt estate of Allen Gordon Frost; and (v) as to 50% of the balance of the sale proceeds to Allen Gordon Frost, subject to him having provided to the licensed land agent the written consent of Paul Anthony Richardson to Allen Gordon Frost authorising the licensed land agent to pay that sum to Allen Gordon Frost or alternatively, to the extent referred to in (m) hereof to Paul Anthony Richardson; and (m) for the purposes of this order, in the event that one half of the Mayflower Crescent property is to be transferred by John Sheahan to Allen Gordon Frost, Paul Anthony Richardson shall at his expense consent to the said transfer and in the event that the Mayflower Crescent property is sold, Paul Anthony Richardson shall at his expense file with the Registrar General of the Lands Titles Office in a form approved by the Registrar General applications to discharge both the mortgages referred to in Order 3 and 4 hereof but so that, to the extent that Paul Anthony Richardson holds security over the said property as against Allen Gordon Frost the discharge of the said mortgages shall be effected contemporaneously with the payment of the sum referred to in Order 6(l)(v) hereof. 7. Allen Gordon Frost be at liberty to purchase for the sum of $157,500 the interest held by John Sheahan in one of the two shares in Ambrose Baker & Partners (Holdings) Pty Ltd as trustee of the bankrupt estate of Allen Gordon Frost by indicating in writing to John Sheahan at his address for service in these proceedings by 19 July 2011 that he accepts the offer made by John Sheahan in Court on 10 May 2011 to sell to him the said interest in that share for $157,500 at settlement within 28 days of the written acceptance of that offer in exchange for a duly executed transfer by John Sheahan of that interest. 8. The stamp duty and other costs normally borne by a purchaser or vendor on the transfers referred to in Orders 5, 6 and 7 hereof be borne in accordance with law and with normal conveyancing practice. 9. There be liberty to either Allen Gordon Frost or John Sheahan to apply on short notice in the event that, for any reason, it becomes necessary or desirable for proper reason to vary any of Orders 5, 6 and 7 hereof, including in the event that Allen Gordon Frost does not accept the offer referred to in Order 7 hereof and that either Allen Gordon Frost or John Sheahan seek some further order or orders to realise the value of the share held by John Sheahan in Ambrose Baker & Partners (Holdings) Pty Ltd. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.