The judicial interpretation of the powers and roles of bankruptcy trustees in the sale of jointly owned property can be complex, given the interaction between Federal Bankruptcy Law and State Property Law. The cases of Coshott, Juratowitch and Pekar indicate how Courts and Tribunals can appoint applicant sole trustees for the purposes of selling co-owned land in Victoria.
Coshott v Prentice [2014] FCAFC 88 (“Coshott”)
In the matter of Coshott, the trustee in bankruptcy applied to sell property in NSW where co-owners included a bankrupt. A key question was whether the Bankruptcy Act 1966 allowed a bankruptcy trustee to act alone or if state legislation required additional trustees. The Full Federal Court held that the Bankruptcy Act did not allow a trustee to act solely due to the rights of non-bankrupt co-owners. However, under s66G of the Conveyancing Act 1919 (NSW), an order for sale could still be made. The court noted that at least two trustees were needed under this section, though it did not preclude a bankruptcy trustee from being one of them.
Juratowitch (as Trustee of the Bankrupt Estates of Parolin and Parolin) v Parolin & Ors [2016] FCCA 3439 (“Juratowitch”)
In the matter of Juratowitch, the trustee managed two bankrupt estates, each owning a 1/3 share of a property in Victoria. The issue was whether the trustee could sell the property given the non-bankrupt 1/3 co-owner. Justice Harnett relied on the precedent set in Coshott to order the sale of the property under Part IV of the Property Law Act 1958 (Vic), with the trustee appointed to handle the sale.
Pekar v Holden (Trustee) [2017] FCA 596 (“Pekar”)
In the matter of Pekar, as in Juratowitch, the individual trustee of the bankrupt estate as applicant was appointed as sole trustee for sale of the property by the Court.
Sale of co-owned land by a Bankruptcy Trustee in Victoria
As was found in Juratowitch and Pekar, the Court can appoint the bankruptcy trustee as the sole trustee for sale if deemed appropriate, as long as the roles are managed distinctly. The Property Law Act 1958 (Vic) does not specify the number of trustees required for sale or the eligibility criteria, leaving it to the Court or VCAT to determine the most suitable person.
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