Barry v Coshott (No.4)
[2011] FMCA 611
•1 August 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARRY v COSHOTT (No.4) | [2011] FMCA 611 |
| BANKRUPTCY – Creditor’s petition – further adjournment to allow settlement efforts in related Federal Court proceedings. |
| Bankruptcy Act 1966 (Cth) |
| Barry v Coshott (No.3) [2011] FMCA 541 |
| Applicant: | STEPHEN MICHAEL BARRY |
| Respondent: | LJILJANA COSHOTT |
| File Number: | SYG 1738 of 2010 |
| Judgment of: | Smith FM |
| Hearing date: | 1 August 2011 |
| Delivered at: | Sydney |
| Delivered on: | 1 August 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Johnson |
| Solicitors for the Applicant: | Sally Nash & Co |
| Counsel for the Respondent: | Mr S Bliim |
ORDERS
The petition and interim application filed on 18 July 2011 are adjourned for directions only on 20 September 2011 at 10.15am.
No orders as to costs of today’s listing, with the intent that the parties shall bear their own costs.
The applicant must give a copy of these orders to the Official Receiver within 2 working days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1738 of 2010
| STEPHEN MICHAEL BARRY |
Applicant
And
| LJILJANA COSHOTT |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This is now the fifth contested adjournment of this creditor’s petition, and I have given a series of judgments explaining my adjournments. In short, they have occurred to allow Mr and Mrs Coshott’s joint and separate liabilities to their creditors to be satisfied in the context of settlement negotiations occurring in two proceedings in the Federal Court before Rares J.
In my last judgment, I referred to my frustration at not being well informed as to what was occurring in those proceedings, and also to the waste of judicial time involved in continually holding half-day contested adjournment hearings.
The matter was subsequently listed before Rares J on 21 July 2011. I do have the advantage today of a transcript of what occurred on that occasion. Mr Barry, who is the petitioning creditor represented before me by Mr Johnson, appeared in person before Rares J. Mr Johnson appeared before Rares J for the Mr Coshott’s trustee, Mr Burke, who is a respondent in one of the proceedings before Rares J. The transcript shows that his Honour discussed with Mr Barry solutions to the impediment which had caused the previous adjournment, being a claimed lien by Mr Barry and his firm of solicitors on title documents over the property which was intended to provide security for the raising of funds to pay out all the creditors. As I understand the transcript, a formulation of words was agreed involving the payment into court of a sum to meet possible liabilities of Mr and Mrs Coshott which have not yet been fully assessed or tried. Mr Barry appears to have express acceptance of the terms that were subsequently forwarded to the parties by his Honour’s associate at the end of that proceeding. The proposed settlement therefore appeared able to be fully completed within days.
However, upon his Honour having arrived at what must have appeared to his Honour and to Mr and Mrs Coshott and their family as the removal of the last impediment facing the settlement and the annulment of Mr Coshott’s bankruptcy, Mr Johnson announced to his Honour that a letter had been received by Mr Burke from the Commonwealth Bank, indicating an intention to seek to amend a proof of debt which had previously been lodged in Mr Coshott’s bankruptcy in relation to a small credit card debt. The Commonwealth Bank had informed Mr Burke by letter dated 21 July 2011, that a liability it had previously written off in relation to untaxed costs orders made in the Supreme Court in 2002 and 2004 could provide grounds for seeking to amend its proof of debt. This is apparently notwithstanding that Mr Burke had previously advertised for the closure of proofs. His Honour expressed understandable frustration at that announcement, and the lack of previous warning to his Honour and to the Coshott family. He adjourned the proceedings to allow an explanation for Mr Burke’s previous conduct to be given to his Honour, and to hear from the Commonwealth Bank. The matter was then adjourned to the following day.
I also have the benefit of the transcript of the proceedings before Rares J on 22 July 2011. His Honour spent time exploring the new position of the Commonwealth Bank with Mr Johnson and counsel for the Commonwealth Bank. The latter counsel announced that not only was the Commonwealth Bank considering an amendment to its proof of debt, but might also withdraw the previously offered financing that would facilitate the settlement of the annulment under s.153A. As I read the announcements of counsel for the Commonwealth Bank, it had not arrived at any decisions about what to do in relation to Mr Coshott. Understandably, Mr Coshott was also in a state of uncertainty as to how the settlement could proceed or would proceed. His Honour adjourned the mater for directions before his Honour on 1 September 2011, giving orders allowing the filing of affidavits that might go to issues of costs.
I can find nowhere in the transcript on either of these days, anything that indicates to me that the parties to the previously negotiated terms of settlement told his Honour that the settlement could not be achieved, although obviously it may need to be reconsidered and possibly renegotiated during the adjournment. I can find nothing in the transcript indicating that his Honour was satisfied that his Honour’s previous efforts to facilitate a resolution of this highly complicated settlement had in fact failed. I am not satisfied that there is now no prospect that this is achievable.
At page 54 of the transcript of 22 July 2011, Mr Johnson drew Rares J’s attention to the existence of the extant creditors petition against Mrs Coshott, and his Honour said:
Well, Mr Barry, I assume, will not pursue that since that has gone off at the moment until this other thing resolves one way or another, will he?
Mr Barry thereupon responded:
It would be my intention to pursue it, you Honour. Apart from the debts that we’ve been discussing today, there are other debts that Mrs Coshott owes to me and my partner beyond those, and we see it in our commercial interests that we proceed with the Creditor’s petition unless Mrs Coshott succeeds in obtaining another adjournment. I don’t wish your Honour to be under any misapprehension as to that issue. I thought I should make it very clear when your Honour just said what you said.
I have difficulty understanding Mr Barry’s motivations for his stance in relation to the settlement, which objectively appears attractive to all creditors with substantial claims of indebtedness in Mr Coshott’s bankruptcy, including the joint debt upon which the present petition against Mrs Coshott is based. However, it is not normally part of my function to examine the motives of a creditor for pursuing a creditor’s remedies under the Bankruptcy Act.
It is enough that I am satisfied today, as I was on the last four occasions, that it is appropriate for this petition to be adjourned to await the outcome of the settlement efforts occurring before Rares J. In this respect, I expressed a clear conclusion in my judgment on the last occasion, where I stated (see Barry v Coshott (No.3) [2011] FMCA 541):
[21]. I have concluded that the petition should remain in my list, and that the present situation remains one where the bankruptcy court should adjourn the petition to await developments in other courts which hold prospects of resolving the underlying indebtedness claimed in the petition and all other related issues.
I have listened to all the submissions made to me today by Mr Johnson on behalf of Mr Barry but am not persuaded that I should arrive at any other assessment. I therefore propose to adjourn this petition for a listing for directions only, on a date after 1 September which will be most convenient to the court. I shall then review how and when any further contested hearings should proceed, including in relation to the future listing of the petition for hearing and Mr Barry’s recent interim application to amend the petition. I note that I have extended the life of the petition, so that it will not expire until August 2012.
In relation to the costs of today’s contested adjournment application, it does appear to me that, in the light of my previous judgments over the course of the previous four hearings, Mr Barry should have been clearly on notice that it was most unlikely that I would be persuaded to take any other approach to adjournment of the petition while there was outstanding negotiations for a settlement of the principal indebtedness of both Mr and Mrs Coshott to Mr Barry and their other creditors occurring before Rares J. In my view, costs have been unnecessarily incurred in relation to today’s hearing as a result of Mr Barry’s intransigence. I have again overruled his objections to an adjournment sought, essentially, on the same grounds as the previous adjournments. However, on balance, I propose to deal with the costs of both parties, by ordering no costs in relation to either party’s costs of today’s listing shall be recoverable.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Smith FM
Date: 8 August 2011
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