Brien v P & E Phontos Pty Ltd - [1999] FCA 1072

FEDERAL COURT OF AUSTRALIA
Brien v P & E Phontos Pty Ltd (In the matter of Estate of Metchler) [1999] FCA 1072
BANKRUPTCY – application by trustee in bankruptcy to extend time to elect to prosecute legal proceedings commenced by bankrupt – whether time may be extended after assignment of the right to bring the action – whether adequate grounds for the court to exercise its discretion to extend time
Bankruptcy Act (Cth) 1966, ss 33(c), 60(2), 60(3)
Re Faulkner; Ex parte Official Receiver (1981) 52 FCR 109, followed
Ryan v Hopkinson (1993) 16 FAMLR 659, followed
Stobbart v Mocnaj (1996) 16 WAR 318, distinguished
Temsign v Biscen (1998) 157 ALR 83, distinguised
IN THE MATTER OF ESTATE OF ANTON EDWIN METCHLER;
RICHARD C BRIEN v P & E PHONTOS PTY LTD
NG 8201 of 1998
MADGWICK J
SYDNEY
6 AUGUST 1999

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 8201 OF 1998

BETWEEN:

RICHARD C BRIEN
Applicant

AND:

P & E PHONTOS PTY LTD
Respondent

JUDGE:

MADGWICK J

DATE:

6 AUGUST 1999

PLACE:

SYDNEY

REASONS FOR JUDGMENT
HIS HONOUR:

This is an application to extend the time in which a trustee, pursuant to a Deed of Arrangement made under Part X of the Bankruptcy Act (Cth) 1966 (the Act), may elect to prosecute certain legal proceedings commenced by the debtor.
The applicant, Mr Richard Brien, was appointed trustee of the estate of Dr Anton Metchler (the debtor) on 8 February 1993. In 1991 the debtor had sued P & E Phontos Pty Ltd and others (by consent made the respondents to this notice of motion) in the Supreme Court of New South Wales. The action was current when the applicant was appointed as trustee. However, the trustee did not become aware of the Supreme Court action until 9 February 1998. The debtor had apparently regarded himself as no more than his father's nominee in the Supreme Court action and in the underlying transaction which gave rise to it. The evidence is that, on the trustee’s appointment, he forgot to inform the trustee of the action. The respondents only become aware of the trustee's appointment much later, and they then served the trustee with notice of the action. The applicant trustee did not elect to prosecute the action, begun by the debtor, within 28 days of being served with the notice. Unless that time be now extended then, according to s 60(3) of the Act, the action would be deemed to have been abandoned.
After the expiry of the 28 day limit, on 20 May 1998, the applicant assigned his right, title and interest in the causes of action, described in the Statement of Claim in the Supreme Court proceeding, to the debtor’s father, Mr Leslie Metchler (the assignee). The applicant now seeks in this Court to extend the 28 day limitation, imposed by s 60 of the Act, in which he may elect to prosecute the legal proceedings before the Supreme Court.

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Brien v P & E Phontos Pty Ltd

Details

AGLC: Brien v P & E Phontos Pty Ltd [1999] FCA 1072
Case: [1999] FCA 1072
Decision Date: 6 AUGUST 1999

CaseChat Overview and Summary

The case of Brien v P & E Phontos Pty Ltd concerns an application by a trustee in bankruptcy seeking an extension of time to elect to prosecute certain legal proceedings that were commenced by the bankrupt debtor. The trustee in bankruptcy, Richard Brien, was appointed on 8 February 1993 and was made aware of the proceedings, which had been initiated by the debtor, Dr Anton Metchler, on 9 February 1998. Dr Metchler had sued P & E Phontos Pty Ltd and others in the Supreme Court of New South Wales, but the action was not brought to the trustee's attention until 9 February 1998. After the 28-day limit imposed by s 60 of the Bankruptcy Act (Cth) 1966 had passed, Mr Brien assigned his right, title, and interest in the causes of action to the debtor’s father, Mr Leslie Metchler.

The legal issues before the court were whether the time limit for electing to prosecute the legal proceedings could be extended after the assignment of the right to bring the action, and whether there were sufficient grounds to warrant the court exercising its discretion to extend time. The respondents argued that, having assigned the right to maintain the action, the trustee had nothing left in respect of which he might make an election under s 60(2) and, therefore, nothing in relation to which to make an application for an extension of time under s 33(c).

Justice Madgwick held that the court had the power to grant an extension of time and that it would not be futile to do so. The court found that the Bankruptcy Act contemplates that the trustee may elect to prosecute or discontinue the action, and that the election may include the meaning "to prosecute or to arrange the prosecution of the action by an assignee who is not a bankrupt, whether or not the assignment occurs before or after the trustee's election to prosecute." The court also found that the grounds were sufficient to warrant the exercise of the court's discretion to extend time, and that the relief sought should be conditional upon the applicant undertaking to pay the respondents' costs of the application on an indemnity basis.

In conclusion, the court granted an extension of time for 21 days from the date of the judgment, subject to the applicant undertaking to pay the respondents' costs of the application on an indemnity basis.

Orders