Sanna v P G Weston as Trustee for the Estate of Lepa Sanna [2020] NSWSC 1507 (29 October 2020)

Last Updated: 4 November 2020

Supreme Court New South Wales

Case Name:	Sanna v P G Weston as Trustee for the Estate of Lepa Sanna
Medium Neutral Citation:	[2020] NSWSC 1507
Hearing Date(s):	29 October 2020
Date of Orders:	29 October 2020
Decision Date:	29 October 2020
Jurisdiction:	Common Law
Before:	Bellew J
Decision:	(1) The proceedings are dismissed. (2) The plaintiff is to pay the defendant's costs as agreed or assessed.
Catchwords:	PRACTICE AND PROCEDURE – Application for injunction to restrain the sale of real properties – Where the plaintiff was declared bankrupt and the defendant became the trustee of her bankrupt estate – Where the Federal Court made orders empowering the defendant to sell the real properties – Where the plaintiff submitted that it was necessary for the court to make the orders sought so that she could carry out fraud investigations – Where the plaintiff’s assertions as to fraud were wholly unspecified – Where the plaintiff asserted that the defendant had been negligent , fraudulent and obstructed investigations – Where there was no evidence to substantiate those assertions – Where the making of the order would have frustrated or prevented the defendant carrying out the tasks that the orders of the Federal Court empowered him to do – Where the plaintiff sought to reagitate matters already determined in the Federal Court – Proceedings dismissed
Legislation Cited:	Bankruptcy Act 1966 (Cth) Family Law Act 1975 (Cth)
Category:	Procedural and other rulings
Parties:	Lepa Sanna – Plaintiff PG Weston as Trustee for the Estate of Lepa Sanna
Representation:	Counsel: Defendant – Anthony Spencer Solicitors: Plaintiff – Self Defendant – Dentons
File Number(s):	2020/241992
Publication Restriction:	Nil

JUDGMENT – EX TEMPORE (REVISED)

1. By a summons filed on 19 August 2020 the plaintiff in these proceedings seeks orders which are pleaded in the following terms:

(1) An urgent injunction to restrain the sale of real properties at:
33 Circulo Drive, Copacabana, New South Wales 2251 and
83b Linderman Crescent, Green Valley 2168

(2) To stop the sale of properties in 1 above until fraud investigations with the banks are finalised.

(3) For the Court to order that the Defendant not obstruct the investigations with any entity requiring their authority in relation to the Plaintiff.

(4) For the Defendant to do all things necessary as required so as not to prevent any obstructing of investigations by the Plaintiff regarding fraud and negligence in relation to all and any matters prior to, during or after her bankruptcy.

(5) Leave to serve the Defendant at the known email contacts.

(6) Such further or other order as the Court considers appropriate.

2. A court book containing the entirety of the evidentiary material, together with outline(s) of written submissions from the plaintiff and the defendant, were admitted without objection and marked exhibit A. In addition, oral submissions were made by the plaintiff, her support person who was present with her, as well as counsel who appeared on behalf of the defendant.
3. The background to these proceedings is helpfully set out in the written submissions of counsel for the defendant from which I draw the following summary.
4. Prior to 8 May 2013 the plaintiff was the registered proprietor of a property at Copacabana (the Copacabana property). She also had a 50 per cent ownership of a property in Green Valley (the Green Valley property).
5. On 12 January 2012 an organisation to which I will refer as AETL, which held a mortgage over the Copacabana property, obtained judgment against the plaintiff in this Court for a sum of $1,840,309.83. By a transfer dated 8 May 2013 the plaintiff transferred the Copacabana property to her husband. By an unregistered transfer she also transferred her half interest in the Green Valley property to her husband.
6. The plaintiff was declared bankrupt on 10 December 2013 at which time the defendant became the trustee of her bankrupt estate. On or about 17 January 2014 the defendant lodged a caveat over the Green Valley property. On 22 July 2015, having received a lapsing notice, the defendant commenced proceedings in this Court against the plaintiff seeking (inter alia) orders extending the operation of the caveat. On 25 February 2016 the defendant commenced proceedings in the Federal Court of Australia to avoid the transfers which had purportedly been made by the plaintiff in respect of her interests in the Green Valley property and the Copacabana property.
7. On 26 February 2016 Darke J transferred the proceedings seeking an extension of the caveat to the Federal Court. On 6 July 2016, Katzmann J in the Federal Court made orders that those proceedings be heard together with the proceedings which had been brought by the defendant seeking orders avoiding the transfers.
8. The final hearing of both proceedings took place before Markovic J in the Federal Court between 12 and 14 March 2018, following which her Honour concluded that both transfers were void as against the defendant. On 21 March 2019 her Honour made declarations consistent with that judgment. At the same time an order was made that the plaintiff’s husband execute a transfer of the Green Valley property in favour of the defendant.
9. In the meantime in 2015 three plaintiffs, namely Wyse & Young International Pty Limited, Wolgan Consulting Pty Limited and Defined Properties Investment Pty Limited had commenced proceedings in this Court against Mr Sanna, his son and a company, DCL Construction Group Pty Limited. In a defence filed in those proceedings on 20 December 2016 the execution of all relevant documents was denied and an assertion made that the signatures of Mr Sanna, the plaintiff and their related entities were forgeries. Both the plaintiff and Mr Sanna gave evidence in support of that defence, which was ultimately rejected. Judgments were entered by this Court in favour of each of the plaintiffs on 3 July 2019. The plaintiffs in those proceedings argued that some or all of the judgment sums were secured over the Copacabana and Green Valley properties. In those circumstances an order was made that those proceedings also be transferred to the Federal Court.
10. Nine caveats were ultimately lodged against the Copacabana property, including one by the defendant and one by the plaintiff. Ten caveats against the Green Valley property were also lodged, including one by the defendant and one by the plaintiff.
11. On the evidence before me, the Copacabana property is currently worth between $1.250 million and $1.3 million. The Green Valley property may be worth between $540,000 and $580,000. Subject to the precise amounts which are owed to the caveators, and subject to the value of each property, there may be little or no equity in either of them. That therefore gives rise to a need to realise the properties so that the competing interests of the caveators can be prioritised, and related issues addressed.
12. On 6 March 2020 the defendant filed an application in the Federal Court seeking, amongst other things, an order allowing him, in his capacity as the trustee, to sell the Copacabana property and have himself and another person appointed by the Court as trustees to sell the Green Valley property. An order was also sought for the net proceeds from the sale of both properties to be paid into Court pending resolution of the competing claims. On 16 April 2020 Markovic J made orders joining the plaintiff and other caveators as respondents to those proceedings. The plaintiff opposed the orders which had been sought by the defendant on the basis of similar propositions to those upon which she now relies. In particular, there is evidence before me that the plaintiff opposed the sale of her estate –

“[U]ntil there is full disclosed clarity on matters to which I was not able to speak into that will assist with the determination of claims against the properties to obtain the best financial outcome.”

13. On 15 June 2020, Markovic J ordered that the defendant be empowered to offer the Copacabana property for sale and to sell that property by public auction with power to fix a reserve price or, alternatively, to sell the property by private treaty at the best available price. Her Honour also ordered that the defendant and one other person be appointed as trustees for the purposes of the sale of the Green Valley property. At the same time an order was made authorising and empowering the trustees to offer the Green Valley property for sale.
14. The defendant has taken steps in accordance with her Honour’s orders, including obtaining a writ of possession in relation to the Copacabana property on 17 September 2020.
15. I have already noted that the plaintiff has previously been declared bankrupt. The property of a person who becomes bankrupt vests in his or her trustee upon the making of a sequestration order, by virtue of the operation of s 58(1) of the Bankruptcy Act 1966 (Cth) (the Act). Pursuant to s 58(2), where property is of a kind that requires the registration of a transmission, the property vests in the trustee in equity by virtue of s 58 and vests in law in the trustee upon registration of the relevant transmission.
16. The effect of those provisions is that once the trustee has become registered, the bankrupt has neither a legal nor an equitable interest in the property in question. Moreover, property the subject of a transfer made void by s 120 or s 121 of the Act as a result of a trustee's election to avoid vests forthwith in the trustee by the operation of ss 58, 115, 116 and 5 of the Act. It has been submitted on behalf of the defendant that the effect of the judgment of the Federal Court of 24 January 2019 was to confirm that the equitable ownership of the Copacabana property had been with the trustee since the making of the sequestration order, following which the plaintiff was declared bankrupt.
17. In her written submissions, as well as in the course of oral submissions, the plaintiff made repeated references to the necessity for this Court to make the orders sought so that she could carry out "investigations" in relation to various matters arising out of her bankrupt estate. She made various, albeit unspecified, allegations of fraud, and asserted that it was "of the utmost critical importance" that the defendant not hinder the process of her inquiries and "sign off on any authorities as required". She said, amongst other things, that she had commenced her investigations surrounding "fraud" in 2019 and had lodged "fraud reports" to the police regarding persons "committing fraud and false representations against [her], [her] bankruptcy and [her] estate". She asserted at one stage, through her support person, that there had been collusion between the defendant and others which had had the effect, amongst other things, of frustrating the inquiries that she seeks to make. It will be apparent from those observations that the plaintiff's assertions as to fraud are wholly unspecified, and are pleaded in a way which is contrary to the fundamental principle that fraud must be pleaded with appropriate specificity.
18. Apart from these matters, there are, in my view, a number of other difficulties with the orders which have been sought.
19. Firstly and fundamentally, if the injunctive relief which is sought by the plaintiff were made, it would have the effect of frustrating or preventing the defendant from carrying out tasks that the orders of the Federal Court expressly empower him to do. Those orders followed a contested hearing in which the plaintiff participated. However, the plaintiff’s submissions in support of orders 1 and 2 do little more than reagitate and reassert matters which have already been the subject of submissions in the Federal Court in respect of issues which have been determined in the defendant’s favour.
20. The conclusion that it would, in all of those circumstances, be entirely inappropriate for this Court to make either orders 1 and 2 will be self-evident.
21. However, the plaintiff's difficulties do not end there. The orders which she seeks are, in a number of respects, vague in the extreme. They variously refer to "investigations" which are said to be “necessary”. That purported necessity is not explained. In support of such orders, the plaintiff makes broad and unspecified allegations of fraud and negligence on the part of the defendant. She asserts, impliedly and in the absence of evidence, that the defendant has been party to the obstruction of those "investigations". I am not satisfied, on the evidence before me, that there is any substance to any of those assertions.
22. Moreover, as I have already observed, there has been a blanket failure on the part of the plaintiff to plead, with the appropriate degree of precision, exactly what she alleges in terms of fraud. There is no evidence which satisfies me, even at a threshold level, that the defendant has been negligent, that he has been fraudulent or that he has failed in any respect to carry out the necessary and appropriate investigations in his capacity as the trustee of the plaintiff's bankrupt estate.
23. It follows from what I have said that, quite apart from the absence of any evidence to support the making of the orders sought, the vagueness of their terms render it wholly inappropriate to make them.
24. Accordingly, and for those reasons, I make an order dismissing the proceedings. There is no reason in my view why costs ought not follow the event. I further order that the plaintiff pay the defendant's costs as agreed or assessed.

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