Jess v McNiven, in the matter of McNiven (No 2) [2022] FCA 446

FEDERAL COURT OF AUSTRALIA

Jess v McNiven, in the matter of McNiven (No 2) [2022] FCA 446 File number: VID 1571 of 2018

Judgment of: ANASTASSIOU J

Date of judgment: 29 April 2022

Catchwords: BANKRUPTCY – where bankrupts owned a matrimonial home and investment property at time of bankruptcy – where properties vested in trustees pursuant to s 58 of the Bankruptcy Act 1966 (Cth) on declaration of bankruptcy – where properties secured by two mortgages – where debts owed under mortgages exceeded value of properties at time of bankruptcy – where trustees investigated validity of second mortgage – where bankrupts discharged from bankruptcy notwithstanding suspicions regarding second mortgage – where bankrupts continued to reside in matrimonial home and receive rental income from investment property – where settlement reached to withdraw second mortgage several years after discharge of bankruptcy – where trustees and bankrupts engaged in without prejudice negotiations following withdrawal of second mortgage – where trustees eventually took transmission of properties and sought vacant possession – whether trustees entitled to a declaration that they are the owners of the properties with powers to dispose of or sell the properties – application granted ESTOPPEL – whether principles of estoppel apply in the face of a statute – whether decision in O'Brien v Sheahan [2002] FCA 1292 stands for proposition that there can be an estoppel in the context of the administration of bankrupt estates – statutory purpose and policy considerations informing vesting provisions in Bankruptcy Act – relevant duties and obligations of trustee of a bankrupt estate – principles of estoppel inconsistent with scheme for the administration of bankrupt estates – distinguished O'Brien v Sheahan [2002] FCA 1292 – whether alleged representations contained in reports to creditors and by conduct (including silence and inaction) sufficiently clear and unequivocal to found an estoppel – whether bankrupts relied on any representations to their detriment – whether appropriate remedy would be to require transfer of properties – estoppel claim dismissed UNJUST ENRICHMENT – whether equitable accounting appropriate in circumstances – analytical framework for claim guided by principle of unjust enrichment – whether trustees or bankrupts entitled to benefit of any capital growth of properties – whether bankrupts entitled to a credit for repayment of interest of loans secured against properties – whether bankrupts required to account to trustees for rent received on investment property and notional rent of matrimonial home – whether bankrupts entitled to credit for payments of rates, taxes and outgoing – whether bankrupts entitled to value of capital improvements, maintenance and repairs – no order for restitution