GEL Custodians Pty Limited v Elliott [2013] NSWSC 690

Supreme Court New South Wales

Medium Neutral Citation: GEL Custodians Pty Limited v Elliott [2013] NSWSC 690 Hearing dates: 31 May 2013 Decision date: 31 May 2013 Jurisdiction: Common Law Before: Schmidt J Decision: Defendants' defence struck out and cross-claim dismissed Catchwords: PROCEDURE - possession - application to strike out defence - granted - application to dismiss cross-claim - granted Legislation Cited: Bankruptcy Act 1966 (Cth) Uniform Civil Procedure Rules 2005 Cases Cited: National Australia Bank Ltd v Darroch [2010] NSWSC 1202 National Australia Bank v Strik [2009] NSWSC 184 Category: Procedural and other rulings Parties: GEL Custodians Pty Limited ACN 118 374 155 (Plaintiff) Brian James Elliott (First Defendant) Susan Ann Elliott (Second Defendant) Representation: Solicitors: Mr R Lewin Gadens Lawyers (Plaintiff) Mr M Tierney Bartier Perry (Trustee of First and Second Defendants) File Number(s): 2011/104697 Publication restriction: None

EXTEMPORE Judgment 1These proceedings were commenced by statement of claim filed on 30 March 2011 by which the plaintiff Bank sought judgment against the first and second defendants in the sum of some $262,302.52 together with an order for possession of land which it claimed secured that sum by way of mortgage over the land. 2There was no defence filed and in due course in December 2012, default judgment was entered in favour of the Bank. 3By notice of motion filed in July 2012 the defendants sought orders setting aside the default judgment and allowing them to file a defence and cross-claim. That motion was disposed of by consent, with the result that in August 2012 the defendants filed a defence and cross-claim. 4In April 2013 orders of sequestration were made against both defendants in the Federal Magistrates Court of Australia. When the matter came before the Court again on 1 May there was an appearance for the defendants' Trustee in bankruptcy. The matter was adjourned so that the Trustee could consider whether or not to make an election under the Bankruptcy Act 1966 (Cth) as to the pursuit of the defence and cross-claim. 5Today it has been announced for the Trustee that he does not wish to pursue either the defence or the cross-claim. 6In those circumstances the Bank seeks to have the defence struck out, relying on the approach of Harrison J in National Australia Bank Ltd v Darroch [ 2010] NSWSC 1202. There his Honour was dealing with somewhat similar circumstances and referred at [7] to what Johnson J had observed in National Australia Bank v Strik [2009] NSWSC 184 at [9] and [10]: "[9] I am satisfied that the Defendant has no more than a bare legal interest in the Wollongong property which he holds for the benefit of the Official Trustee, and that he has no interest in the proceedings brought against him for possession of the property and has no standing to be heard in defence of the Plaintiff's claim: Farrow Mortgage Services Pty Ltd v Winfield (1992) 2 Qd R 282 at 285; Bendigo Bank Ltd v Demaria [2001] VSC 218 at [18]. Mr White has drawn the Court's attention, appropriately, to the decision of Dodds-Streeton J of the Victorian Supreme Court in Re-Engine Pty Ltd v Fergusson (2007) 209 FLR 1 at 9-12 [50-[68], where reference was made to a number of decisions, including Farrow Mortgage Services Pty Ltd v Winfield and Bendigo Bank Ltd v Demaria. Dodds-Streeton J observed at 12 [67]-[68] that, although the authorities indicate that a bankrupt does not have locus standi or an entitlement to be heard, the Court has a discretion to permit a person to give evidence in answer to allegations of personal misconduct and that, in the unusual circumstances of that case, it would promote the due administration of justice to permit the person to be heard. Nothing said by her Honour undermines the principle concerning standing expressed in Farrow Mortgage Services Pty Ltd v Winfield and Bendigo Bank Ltd v Demaria. [10] The appropriate conclusion is that the Defendant has no standing to appear and make submissions and to tender evidence on the application. The Official Trustee has made clear its view that it does not wish to be heard and that the orders to be made are a matter for the Court." 7Harrison J concluded in the circumstances there before him at paras [8]-[9]: "[8] Ms Bhatti has become divested by reason of her bankruptcy of both her interest in the property and the liability for her provable debts. As a bankrupt she has no right to bring or to prosecute proceedings to protect, enhance or add to the value of the property of which she has been divested. See, for example, Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124. Ms Bhatti has no standing to appear or to make submissions or to tender evidence on the plaintiff's applications. The Official Trustee has made it clear that he does not wish to be heard. [9] The plaintiff's action to recover possession of the property is not a provable debt for the purposes of ss 58(3) and 82 of the Act: see Farrow at 284. The plaintiff does not therefore require leave pursuant to s 58(3) of the Act." 8In the result his Honour was of the view that the defendant had no standing to contest the plaintiff's claim for possession of the property in question in those proceedings and made orders striking out the defence pursuant to r 14.28 of the Uniform Civil Procedure Rules 2005. 9In these proceedings the Bank seeks similar relief under r 14.28 (1)(b) on the basis that the defence in the circumstances would cause delay in the proceedings. Orders in relation to the cross-claim were also sought. 10Having considered the procedural history of the matter and what has fallen from the Trustee today, together with the Bank's submissions, I am satisfied that the Bank's application must succeed. Mr and Mrs Elliott have not appeared today to resist that course. In the circumstances I am satisfied that the orders sought should be made. 11Accordingly, I order that the defendants' defence be struck out and cross-claim dismissed.