Berns v Bank of Western Australia Limited

[2010] FCA 1143

FEDERAL COURT OF AUSTRALIA

Berns v Bank of Western Australia Limited [2010] FCA 1143

Citation:	Berns v Bank of Western Australia Limited [2010] FCA 1143
Parties:	DIANE MARY BERNS, JAMES ADAMSON and TREVOR ROY BRINE v BANK OF WESTERN AUSTRALIA LIMITED
File number(s):	NSD 891 of 2010
Judge:	EMMETT J
Date of judgment:	8 October 2010
Legislation:	Bankruptcy Act 1966 (Cth) ss 58 and 60
Date of hearing:	8 October 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	No catchwords
Number of paragraphs:	6
Solicitor for the Respondent:	Mr L. Cronk, Freehills

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 891 of 2010

BETWEEN:	DIANE MARY BERNS First Applicant
JAMES ADAMSON Second Applicant
TREVOR ROY BRINE Third Applicant
AND:	BANK OF WESTERN AUSTRALIA LIMITED Respondent

JUDGE:	EMMETT J
DATE OF ORDER:	8 OCTOBER 2010
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The proceeding be dismissed.

2.The applicants pay the respondent’s costs of the proceeding.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 891 of 2010

BETWEEN:	DIANE MARY BERNS First Applicant
JAMES ADAMSON Second Applicant
TREVOR ROY BRINE Third Applicant
AND:	BANK OF WESTERN AUSTRALIA LIMITED Respondent

JUDGE:	EMMETT J
DATE:	8 OCTOBER 2010
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. On 20 July 2010, the applicants, Ms Diane Berns, Mr James Adamson and Mr Trevor Brine, commenced a proceeding in the Court by way of statement of claim and application.  The applicants sought relief under s 12AA and s 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) and s 51AC of the Trade Practices Act 1974 (Cth). The relief relates to claims made against the applicants by the respondent, Bank of Western Australia Limited (the Bank) that the applicants are indebted to the Bank pursuant to instruments signed by the applicants, described as Guarantee and Indemnity of 29 March 2007 and a variation letter of 25 February 2009.  By those instruments, the applicants purported to guarantee the payment to the Bank of money by Ishmael Developments Pty Ltd (the Debtor).

2. It appears that the Debtor failed in its obligations to the Bank and the Bank therefore sought to enforce the guarantee and indemnity against the applicants. The applicants say that the instruments relied upon by the Bank are unenforceable because of breaches by the Bank of the Code of Banking Conduct, being an industry code within the meaning of s 51ACA(1) of the Trade Practices Act and s 12CC(2)(h) and s 12CC(11) of the ASIC Act. The application was listed for first directions on 13 August 2010. However, on 21 July 2010 a sequestration order was made in respect of the estates of each of the applicants. Proceedings under that order were stayed until 12 August 2010. In the application filed on 20 July 2010, the applicants also purported to seek interim relief in respect of the sequestration order. That claim, however, was misconceived, the sequestration orders having been made by the Federal Magistrates Court.

3. The proceeding was adjourned to 20 August 2010 and, subsequently, on that day adjourned to today. On 25 August 2010, trustees in bankruptcy were appointed for the estates of the applicants. On 2 September 2010, the Bank gave a notice to the then trustees, pursuant to s 60 of the Bankruptcy Act 1966 (Cth). New trustees in bankruptcy were appointed on 24 September 2010. Under s 58 of the Bankruptcy Act, where a debtor becomes a bankrupt, the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at any subsequent time a registered trustee becomes the trustee of the estate, in that registered trustee.

4. Therefore, the cause of action purportedly relied on in the proceeding vested in the trustees to whom I have referred. Under s 60(2), an action commenced by a person who subsequently becomes a bankrupt is, upon that person becoming bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action. Hence, following the sequestration orders made on 21 July, this proceeding was stayed. Under s 60(3), if the trustee does not make an election within 28 days after notice of the action is served upon the trustee by a defendant to the action, the trustee is deemed to have abandoned the action.

5. The 28 days contemplated by s 60(3) had elapsed by 30 September 2010. Accordingly, the trustees, appointed on 24 September 2010 in place of those appointed on 25 August 2010, are deemed to have abandoned the action. When the matter was called on today for directions, there was no appearance for the applicants and the trustees had previously informed the Court that it was not their intention to appear and that they did not propose to elect to continue the proceeding. In the circumstances, the Bank now seeks an order that the proceeding be dismissed with costs. Whether or not the proceeding is dismissed by operation of s 60 itself it is clear that the trustees have no intention of prosecuting the proceeding.

6. They have informally informed the Court that they have no funds with which to prosecute the proceeding.  In all the circumstances, it is appropriate that an order be made that the proceeding be dismissed and that the applicants pay the Bank’s costs of the proceeding.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:        8 October 2010