Application of Official Trustee in Bankruptcy in the Matter of Bankrupt Estate of David Austin Kelly (No 5)

[2016] FCCA 535

FEDERAL CIRCUIT COURT OF AUSTRALIA

APPLICATION OF OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF BANKRUPT ESTATE OF DAVID AUSTIN KELLY (NO. 5) [2016] FCCA 535

Catchwords:
BANKRUPTCY – Practice and procedure – after dismissing application for adjournment it appeared to the Court that the person who sought adjournment was not capable of adequately conducting the hearing – whether Court should nevertheless make final orders – whether matter should be referred for legal assistance.

Legislation:

Bankruptcy Act 1966 (Cth), s.146

Duties Act 1997 (Cth)

Federal Circuit Court Rules 2001 (Cth), rr.12.02, 12.02(1)

Application Of Official Trustee In Bankruptcy In The Matter Of Bankrupt Estate Of David Austin Kelly (No.2) [2015] FCCA 3036

Applicant: APPLICATION OF OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF BANKRUPT ESTATE OF DAVID AUSTIN KELLY

File Number: SYG 1925 of 2014

Judgment of: Judge Manousaridis

Hearing date: 2 March 2016

Delivered at: Sydney

Delivered on: 18 March 2016

REPRESENTATION

Counsel for the Applicant: Mr T Cleary

Solicitors for the Applicant: TressCox Lawyers

Ms L Williams appeared in person by telephone

ORDERS

1. Ms Lydia Williams be referred to a lawyer for legal assistance pursuant to rule 12.02 of the Federal Circuit Court Rules 2001 (Cth).

2. The matter be listed for directions before Judge Manousaridis at 9.30 am on 13 May 2016.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1925 of 2014

APPLICATION OF OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF BANKRUPT ESTATE OF DAVID AUSTIN KELLY

Applicant

REASONS FOR JUDGMENT

1. On 2 March 2016 I heard and dismissed an application by Ms Lydia Williams to adjourn the hearing of the questions which, in my orders of 13 November 2015,[1] I reserved be heard on 2 March 2016. The questions I there reserved for hearing were “whether Lydia Williams and David Austin Kelly entered into an agreement to the effect of the alleged 31 July 2007 Agreement and, if so, whether Lydia Williams undertook work pursuant to the alleged 31 July 2007 Agreement and, if so, the amount of work she undertook pursuant to the alleged 31 July 2007 Agreement”.

   [1] Application Of Official Trustee In Bankruptcy In The Matter Of Bankrupt Estate Of David Austin Kelly (No.2) [2015] FCCA 3036

2. After I made the order dismissing the application, I attempted to ascertain from Ms Williams whether she wished to proceed with her claim based on the material she had already filed. Ms Williams stated on a number of occasions that she needed further information. I had difficulty, however, obtaining any clear answers from Ms Williams about whether she did or did not wish to proceed with the hearing. The following extract from the transcript illustrates the difficulty I experienced obtaining an answer from Ms Williams:

   HIS HONOUR:  . . . [A]re you in a position or would you like to attempt to prove you’ve got a case on the basis of the material that you have already filed.

   MS WILLIAMS:   Well, it’s a bill.  Yes, but I have a caveat that there is still insufficient, I have been told that there ‑ ‑ ‑

   HIS HONOUR:   All right.

   MS WILLIAMS:   ‑ ‑ ‑ is still insufficient evidence.

   HIS HONOUR:   All right.  Well, can you ‑ ‑ ‑

   MS WILLIAMS:   Now, I am requesting time to file that evidence.  That’s what I need, and I need to speak to the lawyer who is familiar with these – the New South Wales caveats to file that information.  Now, I’m ..... ‑ ‑ ‑

   HIS HONOUR:   Ms Williams, for better or for worse – look, can – Ms Williams, for better or for worse, I’ve decided I’m not going to grant you an adjournment.  What I’m ‑ ‑ ‑

   MS WILLIAMS:   Okay.  You’re making things very difficult.  That’s right.  And you’re discriminating against me.  With all due respect, you are discriminating against me.  You are favouring the lawyers.  You have advised and made statements which are misleading to me and prejudiced and ‑ ‑ ‑

   HIS HONOUR:   Look, that’s – that’s all well and good.  You can deal with that – take that up elsewhere if you so choose.  I’m just trying to ask you to focus on what needs to be focused, given that I have made a decision against you.  All right.

   MS WILLIAMS:   Yes.  Well ‑ ‑ ‑

   HIS HONOUR:   Now – now, just try and focus on what I’m trying to say.

   MS WILLIAMS:   I did the work.  It’s my money.

   HIS HONOUR:   Yes.  But I just want to know ‑ ‑ ‑

   MS WILLIAMS:   Okay.

   HIS HONOUR:   Yes.  I understand that’s what you’re saying.  Now, do you wish today to try and prove your case by reference to what you have already filed in the proceedings ‑ ‑ ‑

   MS WILLIAMS:   Well, I – I ‑ ‑ ‑

   HIS HONOUR:   ‑ ‑ ‑ acknowledging that you say you need more time.

   MS WILLIAMS:   Well, I ..... what I have already filed in the proceedings and not only that, I have been advised that there is further information which I haven’t filed that’s required.  Now, I would like an opportunity to file that information and I would like an equal opportunity to be based on the fact that I have a right to bare access to justice, which, frankly, I’m not a law firm.  I don’t have these – these resources.  I don’t have – have – you know, you – he has given me, basically, a short time which was really, you know, the – the time between – the Christmas/New Year period just doesn’t seem to count, because there’s – there’s difficulties accessing any kind of services and the fact of the matter is it’s not just the submission of a bill.

   HIS HONOUR:   Just ‑ ‑ ‑

   MS WILLIAMS:   That’s what I’ve been told.  I’ve been told ‑ ‑ ‑

   HIS HONOUR:   Mr ‑ ‑ ‑

   MS WILLIAMS:   I’ve been told by lawyers ‑ ‑ ‑

   HIS HONOUR:   Okay.  Ms ‑ ‑ ‑

   MS WILLIAMS:   ‑ ‑ ‑ that – now what I’m saying is ‑ ‑ ‑

   HIS HONOUR:   Mr Cleary – just wait a minute.  Ms Williams, please, just wait a minute.  Mr Cleary, it’s not clear to me that Ms Williams says she will not proceed.

3. As will be seen from the last passage from this extract, I was not satisfied that Ms Williams unequivocally said she did not wish to proceed on the basis of the material she had already filed.

4. I asked counsel for the applicant (Trustee) whether, if the hearing proceeded, he would need to cross-examine Ms Williams. Counsel indicated that would depend on how I was to rule on an objection counsel proposed to make to the admissibility of the agreement on which Ms Williams relies. The basis of that objection was that the agreement was not stamped as required by the Duties Act 1997 (Cth).

5. I then had the following exchange with Ms Williams:

   HIS HONOUR:    . . .  Ms Williams, I will just – I will tell you what’s going on in a moment and I will explain it to you.

   MS WILLIAMS:   All right.

   HIS HONOUR:   All right.  So at the moment what I’m doing is I’m not treating you as saying you do not wish to proceed today.  I understand you say you need more information, but I’ve decided that against you.  I’m assuming that you still wish to prove that you had a security interest based on the material that you have filed.  Am I correct in assuming that’s so?

   MS WILLIAMS:   Well, that’s why it has been filed.

   HIS HONOUR:   Yes.  Are you ‑ ‑ ‑

   MS WILLIAMS:   But ‑ ‑ ‑

   HIS HONOUR:   Are you content today, given that I’m not giving an adjournment, for you to try and prove that you do have security interests based on the material that you have filed?

   MS WILLIAMS:   Well, I’m not actually – I’m actually not focused and I don’t know – I don’t have the other affidavit in front of me and I don’t – and I don’t know, you know.  I don’t even understanding what he was saying.

6. I then inquired of counsel for the Trustee whether, if I were to overrule his objection to the admissibility of the agreement, whether he needed to cross-examine Ms Williams. Counsel said he did, and he said he would be prepared to cross-examine over the telephone. The following exchange then occurred:

   HIS HONOUR:   Well, I will just ask.  Ms Williams?  Ms Williams?

   MS WILLIAMS:   Yes.  Yes.

   HIS HONOUR:   Are you in a position to be cross-examined today?

   MS WILLIAMS:   Well, I’m not in a good state of health to be cross-examined today, so I don’t know.  Hello?

   HIS HONOUR:   Yes.  I’m just making a note of what you just said.  Would you submit to being cross-examined?

   MS WILLIAMS:   Well, however – I don’t know how ..... well, if I’m not in a good state of health in terms of mentally capable of dealing with this, then the information – I’m not sure how that would ‑ ‑ ‑

   HIS HONOUR:   Mr Cleary, I don’t think I can conduct a hearing.

7. It will be seen from this exchange that I formed the view that Ms Williams was not in a position to adequately conduct the hearing. I formed that view on the basis of the impressions I formed in the course of my exchanges with Ms Williams. The exposure of my senses to Ms Williams’ reaction to the possibility of the matter I reserved for hearing proceeding to a hearing brought home to my mind the difficulties under which Ms Williams would labour if I were to hear the matter. These difficulties could be considered, in part, to have been due to Ms Williams not having prepared for the hearing in the first place. But my overwhelming sense was that it was due to Ms Williams’ medical condition. Perhaps that is something I should have apprehended at the time Ms Williams made submissions in support of her application for an adjournment. In that context, I considered Ms Williams’ medical evidence only in relation to whether it provided an adequate explanation for Ms Williams not obtaining the additional evidence. I did not consider whether the medical condition would have affected her ability to conduct and participate in a hearing if I were to decline the adjournment for which she applied. At any rate, by the time I attempted to ascertain on what evidence Ms Williams intended to rely, and whether she was in a position to undergo cross-examination, I formed the view she was not in a position to adequately conduct the hearing.

8. I acknowledged to counsel for the Trustee and to Ms Williams that the situation that had arisen – the dismissal of Ms Williams application for an adjournment, and my forming the view after ordering the dismissal, that Ms Williams was not in a position to conduct the hearing – was vexing. Counsel for the Trustee submitted, in effect, that nothing had changed. Counsel submitted that, for the reasons I had given for dismissing the application for an adjournment, there would not be any utility in not making orders on the Trustee’s application under s.146 of the Bankruptcy Act 1966 (Cth), and I should make those orders, even if Ms Williams were unable to conduct the hearing. I decided to reserve my decision about what I should do.

9. The starting point is the reasons for judgment I published on 13 November 2015. I found Ms Williams has a reasonably arguable case that Mr Kelly became obliged to Ms Williams to make payments to her under what I there referred to as the 31 July 2007 Agreement, and that such obligation was secured by the Mosman Property.[2] It is more than conceivable that had Ms Williams been in a position to conduct the hearing on the material that she has already filed, and after she had been cross-examined, she could have succeeded in her claim that she held a security interest in the Mosman Property. The position, therefore, is there is before the Court a claim I have found to be reasonably arguable that has not been heard by the Court; and, on my findings, it has not been heard at least in substantial part because I had formed the view that Ms Williams was not capable of adequately conducting the hearing. In those circumstances, I can see no option other than again to set down for hearing Ms Williams’ claim that she holds a security interest in the Mosman Property. To order otherwise would be to deny Ms Williams her right to put forward what I have found to be a reasonably arguable claim and for the Court to adjudicate that claim.

   [2] Application Of Official Trustee In Bankruptcy In The Matter Of Bankrupt Estate Of David Austin Kelly (No.2) [2015] FCCA 3036 at [47]

10. If I set down a further hearing date, there is a risk the Court will be faced with the same circumstances with which I was confronted on 2 March 2016. That is, Ms Williams may on the new hearing date again apply for an adjournment and, because of her medical condition, she may not be in a position to adequately conduct the hearing. This risk may be reduced by my referring the matter for legal assistance pursuant to r.12.02 of the Federal Circuit Court Rules 2001 (Cth) (FCC Rules). Subrule 12.02(1) of the FCC Rules provides that the Court may refer a party to a lawyer for legal assistance by issuing a referral certificate. In exercising this power, r.12.02(2) of the FCC Rules identifies matters the Court may take into account. These are the means of the party, the capacity of the party otherwise to obtain legal assistance, the nature and complexity of the proceeding, and any other matters the Court considers appropriate.

11. In my opinion, it would be in the interests of justice to make an order under r.12.02 of the FCC Rules. Ms Williams does not have any financial means to retain a lawyer to prosecute her claim; I have formed the opinion she has a reasonably arguable case that she held a security interest in the Mosman Property; and the issues that are likely to arise on that case are of limited scope.

12. I propose, therefore, to make an order under r.12.02 of the FCC Rules that Ms Williams be referred to a lawyer for legal assistance. The matters on which legal assistance may be required should be apparent from my reasons for judgment of 13 November 2015. To the extent necessary, my Associate will liaise with the Registry to make available to a lawyer who agrees to accept the referral a copy of the affidavits and documents referred to in my reasons for judgment of 13 November 2015. I will also set the matter down for a directions hearing at 9.30 am on 13 May 2016 for the purpose of determining whether any lawyer has agreed to accept the referral and to make further directions, including setting down for hearing Ms Williams’ claim that she held a security interest in the Mosman Property.

13. Whether or not Ms Williams obtains legal assistance by 13 May 2016, I will on that day set the matter down for hearing. Given that the Trustee intends to cross-examine Ms Williams, I will direct that Ms Williams attend that hearing in person. I will not grant Ms Williams leave to appear by telephone, and if she does not appear in person at the hearing, the Trustee’s application will proceed to hearing in the absence of Ms Williams. If, because of her medical condition, Ms Williams feels she may be unable to conduct the hearing on her own behalf, she should consider obtaining the assistance of a person with a view to that person being appointed a litigation guardian for Ms Williams.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis

Associate: 

Date: 18 March 2016