Pascoe v Lyon [2014] NSWSC 308

Supreme Court New South Wales

Medium Neutral Citation: Pascoe v Lyon [2014] NSWSC 308 Hearing dates: 21 March 2014 Decision date: 21 March 2014 Jurisdiction: Common Law Before: Davies J Decision: Defendant's Notice of Motion dated 27 February 2014 dismissed. Catchwords: REAL PROPERTY - order for possession in favour of trustee in bankruptcy - defendant bankrupted for failure to pay strata levies - stay on execution sought - attempt by some creditors to remove trustee - stay sought in the hope trustee will be removed and Scheme of Arrangement made - stay refused Legislation Cited: Bankruptcy Act 1966 (Cth) Category: Interlocutory applications Parties: Scott Darren Pascoe (Plaintiff) John Burkitt Lyon (Defendant) Representation: Counsel: M F Shafiq (Plaintiff) P Fordyce (Defendant) Solicitors: J S Mueller & Co. (Plaintiff) PMF Legal Ltd (Defendant) File Number(s): 2013/173634

Judgment 1The Defendant applies for the stay on the execution of a writ of possession issued in respect of a property being Unit 2 and the garage of 4 Sitella Place, Ingleburn. 2The Plaintiff is the trustee of the bankrupt estate of the Defendant pursuant to a sequestration order of the Federal Magistrates Court made on 8 October 2009. The petitioning creditor was the Owners Corporation of the property concerned. The Defendant has owed levies, I am told, since 2006 which total $25,000. 3A dispute has arisen between some of the creditors and the trustee of the Defendant's estate. In September 2013 five unsecured creditors wrote to the Plaintiff requesting that he resign as trustee and have another trustee appointed in lieu pursuant to s 181A of the Bankruptcy Act 1966 (Cth). The trustee did not call the meeting. That appears to be because the trustee required proofs of debt in relation to some or all of the creditors concerned. 4On 12 February this year the five unsecured creditors again wrote to the Plaintiff requesting that he convene a meeting to consider the appointment of a new trustee. No such meeting has been called. I note, however, that the proofs of debt have only recently been lodged. 5The Motion asks that the writ of possession be stayed until 14 days after the Plaintiff has held the meeting of creditors to determine whether or not he is to be replaced as trustee of the Defendant's bankrupt estate. 6From the figures provided to me by the trustee there appears to be equity in the property concerned of about $80,000 when the outstanding liability to a secured creditor, the mortgagee, is taken into account. It seems clear that one way or another the property will have to be sold for the bankrupt estate to be administered. 7The Defendant asks for the stay so that the meeting can be held in the hope that the trustee will be replaced and that some alternative arrangement such as a Scheme of Arrangement can be entered into that will enable the property to be sold not by the trustee as the Defendant's trustee in bankruptcy. It is said, and commonly thought, that there is some benefit in properties not being sold by such persons as mortgagees in possession or trustees in bankruptcy. 8Nevertheless, no clear time line is available as to when the property would ultimately be sold. The trustee has not yet agreed to call the meeting that has been requested. If he does not do so doubtless the creditors who want the meeting will have to take action, whether through the Federal Court or otherwise, to force the meeting to be called. It will then be a matter for the meeting to determine whether the trustee will be replaced and, if so, whether some scheme of arrangement can be put in place then to sell the property. 9All of that might take an extended period of time and the only possible benefit is a possibly increased sale price because the property is not being sold directly by the trustee. 10In circumstances where the strata levies have been outstanding for such a lengthy period of time and there are other debts owing to public utilities, such as council and water, there does not seem to me to be any basis for staying the writ for any further time. It would simply be a matter of delaying the inevitable in the hope that some increased purchase price would be obtainable. 11For that reason, the Notice of Motion filed 27 February 2014 is dismissed.