Bol v Thurairatnam
[2020] FCCA 572
•26 February 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BOL v THURAIRATNAM | [2020] FCCA 572 |
| Catchwords: CONSUMER LAW – Leave granted to proceed against bankrupt respondent – default judgment against respondent – section 58(3)(b) of the Bankruptcy Act 1966 (Cth) – false representation regarding securing a home loan – single mother of ten children. |
| Legislation: Bankruptcy Act 1966 (Cth) s. 58 Competition and Consumer Act 2010 (Cth) Federal Circuit Court of Australia Act 1999 (Cth), s.77(3)(a) |
| Cases cited: Hillig in his capacity (As Liq of ACN 092 745 330) Pty Ltd v Battaglia [2019] FCA 2191 |
| Applicant: | MARTHA BOL |
| Respondent: | SURENDRAKUMAR THURAIRATNAM |
| File Number: | MLG 3430 of 2019 |
| Judgment of: | Judge McNab |
| Hearing date: | 26 February 2020 |
| Date of Last Submission: | 26 February 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 26 February 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Moller with Mr Foster |
| Solicitors for the Applicant: | Consumer Action Law Centre |
| No appearance by or on behalf of the Respondent |
ORDERS
The Applicant has leave under section 58(3)(b) of the Bankruptcy Act 1966 (Cth) to take such steps in this proceeding as are necessary to obtain judgment against the Respondent.
There be judgment for the Applicant.
The Respondent pay to the Applicant $26,000, together with interest in the sum of $861.58 up to the date of the entry of judgment on this day and from this day a future sum calculated pursuant to section 77(3)(a) of the Federal Circuit Court of Australia Act 1999 (Cth).
The Respondent pay to the Applicant the costs of the proceedings fixed in the sum of $5,556.92 (inclusive of disbursements) and by reference to Part 1 of Schedule 1 of the Federal Circuit Court Rules 2001 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 3430 of 2019
| MARTHA BOL |
Applicant
And
| SURENDRAKUMAR THURAIRATNAM |
Respondent
REASONS FOR JUDGMENT
(REVISED FROM DELIVERED EX-TEMPORE REASONS)
This matter was commenced by way of an Application filed on 9 October 2020. The Application was accompanied by a Statement of Claim which set out in a detailed way the claims of the Applicant.
The Applicant alleged breaches of the National Consumer Credit Protection Act2009 (Cth), breaches of the Australian Consumer Law and also a claim in debt arising from the moneys paid to the Respondent consideration for which has wholly failed.
In summary, the Applicant is a single mother of 10 children and a refugee from South Sudan who migrated to Australia in 2005. At the relevant time, she was:
a)not in paid employment;
b)relied upon Centrelink benefits as her only source of income;
c)was unable to read or write English; and
d)was living with her children in community housing.
The Applicant attends a church in Albion. In or around 2016, one of the members of the congregation of that church arranged an introduction between the Applicant and the Respondent.
The Statement of Claim filed 8 October 2019 outlines that on a Sunday in 2016, a member of the congregation addressed the congregation and said that she knew a person who could help people buy a house. At that time, the Applicant asked that congregation member how she could buy a house and was told that the Respondent could organise loans.
Subsequent to that, the Respondent telephoned the Applicant and in the course of that conversation:
a)the Applicant told the Respondent that she was a single mother with 10 children and that her only source of income was Centrelink;
b)the Respondent told the Applicant that he was a mortgage broker and that he could assist her to obtain a home loan to buy land and build a house; and
c)the Respondent told the Applicant that if the Applicant paid $5,000 to his bank account he would apply for a home loan on her behalf and a bank would approve the home loan.
Subsequent to that conversation, the Applicant told the Respondent she wanted to engage him to obtain the home loan for her.
On or around 13 April 2016, the Applicant paid Mr Thurairatnam the sum of $5,000 into a bank account nominated by him.
Subsequent to that date, as a result of the Applicant not hearing from the Respondent, the Applicant phoned the Respondent to ask about her home loan. The Respondent told her that a bank would not lend to her because she had a ‘bad record’, and that he would use the $5,000 the Applicant had paid him to pay a lawyer to ‘clean [her] bad record’.
As a result of those statements, and in reliance on the previous representations, the Applicant deposited a further $2,000 into a bank account nominated by the Respondent on 13 April 2016.
On 27 April 2016, the Applicant deposited a further $4,000 into a bank account nominated by the Respondent. Subsequently, the Applicant made further inquiries with the Respondent to see how matters were progressing.
In about August 2016, the Applicant was told by a real estate agent contact of the Respondent (‘the real estate agent’) that a parcel of land (‘the land’) had been identified that was suitable for purchase by the Applicant, and that he would contact the Respondent to arrange the funds with which she could purchase the land.
Acting on that real estate agent’s representations, the Applicant signed a contract of sale in relation to the land and a contract for the building of a dwelling on the land. The Respondent did not arrange the funds of the purchase of the land and the contracts were terminated or lapsed.
In late 2016 or early 2017, the Respondent again told the Applicant that she should find land to purchase. The real estate agent identified land for sale in Melton West (‘the Melton West land’) and the Respondent told the Applicant that he would arrange a home loan for her within three weeks.
In about January 2017, the Respondent told the Applicant that a bank ‘was ready’ to provide her with a home loan, but the only way she would be able to obtain it was if she were to pay a further $10,000 to him.
On about 24 January 2017, the Applicant paid a further $11,000 into a bank account nominated by the Respondent.
No bank provided finance for the Applicant to acquire the Melton West land.
On 2 February 2017, the vendor of the Melton West land refused a request by the Applicant for an extension of time to obtain approval of finance, and terminated the contract of sale.
At all times when the Applicant was dealing with the Respondent, the Respondent was not a licensed mortgage broker.
Consideration
The Court finds that it is appropriate to enter judgment on the basis of the default by the Respondent to file or serve a response, an address for service, any defence or otherwise taking any part in this proceeding.
An Application in the Case was filed on 10 December 2019 by which the Applicant sought judgment pursuant to rule 13.03B(2)(c) of the Federal Circuit Court Rules 2001 (Cth) (‘the Rules’). In support of her Application, the Applicant relied on an affidavit of her solicitor, Lisa Grealy of Consumer Action Law Centre, filed on 3 December 2019, and affidavits of service.
Rule 13.1A of the Rules provides:
If a Respondent is in default, the court may, if a proceeding was commenced by an Application supported by a statement of claim, give judgment for the relief the Applicant appears entitled to on the statement of claim and the court is satisfied that it has power to grant.
Rule 13.03B(2)(d) of the Rules provides that:
If a Respondent is in default, the court may give judgment or make any other order against the Respondent.
I find that the Respondent is in default.
The Application in a Case was returnable on 17 December 2019. At that point, the matter did not proceed because the Applicant became aware that the Respondent had been made bankrupt, and that leave was required to proceed against the Respondent pursuant to section 58 of the Bankruptcy Act 1966 (Cth) (‘the Bankruptcy Act’).
On this day, the Applicant seeks leave pursuant to section 58(3)(b) of the Bankruptcy Act to proceed with the Application for judgment in default, and seeks the Orders sought in her Application dated 10 December 2019, including an Order that the Respondent pay her $26,000, together with interest and costs.
The Applicant has been represented in this proceeding throughout by Mr Moller and Mr Foster of Counsel, who have appeared pro bono for the Applicant and have provided detailed comprehensive written submissions which have been of great assistance to the Court.
The effect of section 58(3)(b) of the Bankruptcy Act is that once a debtor becomes bankrupt, a creditor may not take any fresh step in a proceeding except with the leave of the Court. This is to ensure that the bankrupt is not subjected to a multiplicity of actions that would be both expensive and time consuming and, in some cases, unnecessary.
The Counsel for the Applicant referred the court to Hillig in his capacity (As Liq of ACN 092 745 330) Pty Ltd v Battaglia [2019] FCA 2191 at [8], where, in relation to the applicable principles in considering whether to grant leave, the Court stated:
8. […] the amount and seriousness of the claims; the degree and complexity of the legal and factual issues involved; the stage to which the proceedings have progressed; the risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt; whether the claim has arguable merit; whether proceedings are already in motion at the time of the bankruptcy; whether the proceedings will result in prejudice to creditors; whether the claim is in the nature of a test case for the interest or large class of potential claimants; whether the grant of leave will result in further litigation; whether the cost of the hearing will be disproportionate to the size of the bankrupt estate; the risk of delay; and whether pre-trial procedures such as discovery and interrogatories are likely to be required or beneficial.
In my view, it is appropriate in this case for the Court to grant leave and to make the Orders sought by the Applicant.
This is a case of public interest. It also is a case of significant interest to all concerned for the Applicant. The Application is well progressed, and had the Respondent not been placed in bankruptcy, judgment in default would have been awarded in December 2019, given that all the pre-conditions for entering Judgment in default had been satisfied.
The Judgment will not afford the Applicant any priority with her claim as against other creditors. Once Judgment is entered, she will simply become an unsecured creditor, along with other creditors.
I note that the trustees who are administering the Respondent’s bankrupt estate do not oppose the Application, and I refer to a bundle of correspondence between the trustee and the solicitors for the Applicant in that regard.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Judge McNab
Associate:
Date: 13 March 2020
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