Trustees in bankruptcy are entitled to pursue transfers of property by utilising the provisions of the Bankruptcy Act 1966 (Cth) (the Act) for undervalued transactions (section 120) or a transfer to defeat creditors (section 121) and will generally issue Court proceedings to seek recovery where investigations disclose transfers of property prior to bankruptcy. Whilst not favoured by Land Victoria in Victoria, if there is property which has been transferred in another State, a Trustee can have a section 139ZQ Notice issued by the Official Receiver in respect of claims where there has been a transfer of property. The section 139ZQ Notice will usually require a recipient to pay to the Trustee an amount which is equal to the property’s value which was received under the transaction. If the recipient fails to comply with the section 139ZQ Notice, the Trustee can take steps to register a statutory charge on the title to the specific property under section 139ZR of the Act.

In the recent case of Allen (Trustee), in the matter of Camarda (Bankrupt) v Camarda [2024] FedCFamC2G 1238, the Court in Sydney examines the relevant principles which must be satisfied in order to register the charge on the title to the property and exercising the power of sale.

The judgment demonstrates that the following are relevant considerations to be satisfied by the Trustee in these applications:

1. The section 139ZQ will be issued by the Official Receiver and set out the grounds of the claim under section 120 and/or 121 of the Act. It will also seek payment of a specific sum arising from the claim as an amount which is owed and payable by the recipient of the section 139ZQ Notice. The section 139ZQ Notice will specify the time for payment of the amount which is sought by the Trustee.
2. The section 139ZQ Notice will be usually required to be personally served upon the recipient, although there are other methods of service which can be adopted, and it will provide a date for compliance.
3. If the recipient fails to comply with the section 139ZQ Notice, an application can be made to the Australian Financial Security Authority (AFSA) for a certificate to be issued under section 139ZR(4) of the Act. Upon provision of the certificate from AFSA, the Trustee can lodge the certificate with the relevant land authority in the specific State together with the necessary application for registration of the section 139ZR statutory charge on the title to the property.
4. In the event that the Trustee receives no satisfactory resolution of its statutory charge, an application can be made to the Federal Circuit and Family Court of Australia with a supporting Affidavit. The supporting Affidavit should provide sufficient evidence about the bankruptcy, the issue of the section 139ZQ Notice, the registration of the section 139ZR charge on the title of the property and the specific orders which are sought in respect of the sale of the property.
5. Orders for vacant possession of the property may also be required to be sought if the occupants of the property have failed to vacate, despite requests by the Trustee. This evidence should also be set out in the Affidavit. The Court will also grant a writ of possession in the event that the occupants of the property fail to grant vacant possession to the Trustee pursuant to the Court’s orders.
6. The Court noted that the orders which were sought by the Trustee were in similar terms of the orders made in Koshcott Lucan (as trustee of the bankrupt estate of Riches) v Riches [2020] FCCA 2762, Colin Dixon (as trustee of the bankrupt estate of Peto) v Peto [2021] FCCA 621 and Michael (trustee in the matter of Dewey (bankrupt)) v Dewey [2023] FedCFAM C2G248.
7. Based on the Trustee’s Affidavit material and the submissions in support of the application, the Court was satisfied that was appropriate to make orders for the sale of the property in respect of which the charge under section 139ZR of the Act had been registered, orders granting vacant possession in respect of the property, orders for the disposal of property if it was not otherwise removed and for judgment in the sum of the debt which was consistent with the terms of section 139ZQ of the Act.

Catherine Pulverman of FCW Lawyers has considerable experience in this area and she has acted for various Trustees by making applications in both New South Wales and Queensland where orders have been obtained successfully to sell a property by exercising the Trustee’s power of sale under the section 139ZR statutory charge. If you require advice in relation to these applications, Catherine and her team would be happy to provide assistance.