Cardaci v Filippo Primo Cardaci as executor of the estate of Marco Antonio Cardaci

[2019] WASC 30

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   CARDACI -v- FILIPPO PRIMO CARDACI as executor of the estate of MARCO ANTONIO CARDACI [2019] WASC 30

CORAM:   LE MIERE J

HEARD:   ON THE PAPERS

DELIVERED          :   14 FEBRUARY 2019

FILE NO/S:   CIV 3186 of 2016

MATTER:   the Family Provision Act 1972 (WA)

BETWEEN:   MAE CARDACI

Plaintiff

AND

FILIPPO PRIMO CARDACI as executor of the estate of MARCO ANTONIO CARDACI

First Defendant

RONALD GAMBLE as trustee in bankruptcy of THE ESTATE OF MARCO ANTONIO CARDACI 

Second Defendant

Catchwords:

Jurisdiction - Whether proceeding is a proceeding under or by virtue of the Bankruptcy Act - Whether proceeding is within the exclusive jurisdiction of the Federal Court and the Federal Circuit Court - Whether proceeding is a special Federal matter - Whether special reasons Supreme Court should determine proceeding

Legislation:

Bankruptcy Act 1966 (Cth), s 5, s 27
Family Provision Act 1972 (WA)
Jurisdiction of the Courts (Cross-Vesting) Act 1987 (Cth), s 4, s 6

Result:

Plaintiff's application allowed

Category:    B

Representation:

Counsel:

Plaintiff	:	No appearance
First Defendant	:	No appearance
Second Defendant	:	No appearance

Solicitors:

Plaintiff	:	Herbert Smith Freehills
First Defendant	:	Bennett + Co
Second Defendant	:	Tottle Partners

Case(s) referred to in decision(s):

Baykal v Van Der Velde [2017] NSWSC 36

Computershare Ltd v Perpetual Registrars Ltd (No 3) (2000) 2 VR 666

Telstra Corporation Ltd v CXA Communications Ltd [1998] VSC 72; (1998) 146 FLR 481

Truthful Endeavour Pty Ltd v Condon (2015) 233 FCR 174

LE MIERE J:

Summary

1. Marco Cardaci (Marc) died on 7 November 2015.  At the time of his death Marc was married to the plaintiff.  On the day of his death Marc made his last will in which he appointed the first defendant (Philip), his brother, to be his executor and trustee.  This court granted probate of the will.  The will makes provision for the plaintiff.

2. According to the inventory of assets and liabilities prepared and lodged for probate by Philip, Marc left an estate with assets valued at $2,218, 981 and with liabilities of $3,007,555, deeming it insolvent.  On 6 February 2017 the Federal Circuit Court of Australia made a sequestration order against Marc's estate on the grounds of its insolvency.  The second defendant was appointed the trustee in bankruptcy of Marc's estate.

3. The plaintiff commenced this proceeding in which she seeks:

   (a)an order amending Marc's will to make adequate provision out of his estate for the plaintiff's proper maintenance and support;

   (b)such further necessary and consequential orders, directions, accounts and enquiries;

   (c)if the order amending Marc's will does not remove the provisions of the will which establish a particular trust, an order removing Philip as trustee of the trust appointing the plaintiff as its trustee;

   (d)an order removing Philip as the person who will be executor upon Marc's estate ceasing to be administered in insolvency.

   This relief is sought on the basis of the Family Provision Act 1972 (WA).

4. An issue has arisen whether this proceeding is a proceeding under or by virtue of the Bankruptcy Act 1966 (Cth), whether the proceeding, or the relevant part of the proceeding, is within the exclusive jurisdiction of the Federal Court and the Federal Circuit Court by operation of s 27 of the Bankruptcy Act and, whether the proceeding is a special Federal matter within s 6(1) of the Jurisdiction ofCourts (Cross‑Vesting) Act 1987 (Cth) and if so whether the court should make an order under s 6(3) of the Cross‑Vesting Act that the proceeding be determined by this court.

5. For the reasons which follow I am satisfied that there are special reasons for the proceeding to be determined by this court and will order that the proceedings be determined by this court.

Jurisdiction in bankruptcy

1. Section 27(1) of the Bankruptcy Act provides that the Federal Court and the Federal Circuit Court have concurrent jurisdiction in bankruptcy and that jurisdiction is exclusive of the jurisdiction of all courts, other than the High Court and the Family Court. Section 5 of the Bankruptcy Act provides that 'bankruptcy' in relation to jurisdiction or proceedings means any jurisdiction or proceedings under or by virtue of the Bankruptcy Act.  This proceeding is a proceeding under or by virtue of the Bankruptcy Act because it raises issues relating to the extent of the assets available for distribution of the estate of Marc:  Truthful Endeavour Pty Ltd v Condon (2015) 233 FCR 174, [33] ‑ [37], [56], [60]; Baykal v Van Der Velde [2017] NSWSC 36, [11] ‑ [12].

2. Section 27 of the Bankruptcy Act must now be read in light of the Cross‑Vesting Act.  This court is invested with Federal jurisdiction with respect to the matter by s 4(1) of the Cross‑Vesting Act. However, s 6(1), (1A) and (2) of the Cross‑Vesting Act provide that if a proceeding is a special Federal matter this court must transfer so much of the proceeding as the court considers to be within the jurisdiction of the Federal Court to that court.  That provision is qualified by s 6(3) of the Cross‑Vesting Act which provides that this court may order that the proceeding be determined by this court if it is satisfied that there are special reasons for doing so in the particular circumstances of the proceeding other than reasons relevant to the convenience of the parties.

Conditions precedent to order under s 6(3) of Cross‑Vesting Act

1. Section 6(4) of the Cross‑Vesting Act provides that before making an order under s 6(3) the court must be satisfied that:

   (a)a written notice specifying the nature of the special Federal matter has been given to the Attorney‑General of the Commonwealth and the Attorney‑General of the State or Territory where the proceeding is pending; and

   (b)a reasonable time has elapsed since the giving of the notice for the Attorneys General to consider whether submissions to the court should be made in relation to the proceeding.

2. I am satisfied that a written notice specifying the nature of the special Federal matter has been given to the Attorney‑General of the Commonwealth and the Attorney‑General of Western Australia.  Each of those Attorneys‑General has informed the solicitor for the plaintiff in writing that they will not be making a submission to the court in relation to the proceeding.

Special reasons

1. In Computershare Ltd v Perpetual Registrars Ltd (No 3) (2000) 2 VR 666 [88] Warren J referred with approval to the reasons for judgment of Chernov J in Telstra Corporation Ltd v CXA Communications Ltd [1998] VSC 72; (1998) 146 FLR 481 where Chernov J said that 'special reasons' are reasons which are peculiar to the case, not general reasons of convenience and in order for the reasons to be 'special', the circumstances of the case must be such as to take it out of the mainstream of the legislative intent that such cases be heard in the Federal Court. Warren J said that:

   The threshold is high … there must be at least 'a high degree of satisfaction that there are special reasons' for this court to order that the proceeding be retained in this court. The onus is on the person seeking to retain the proceeding in the Supreme Court to satisfy the court that there are 'special reasons' [89].

2. The plaintiff submits that there are five matters which together constituted special reasons for this court to determine the proceedings.  Those matters are:

   (a)The 'special federal matters' raised by the proceedings are the extent of the assets available to the estate, and whether the estate is solvent.  The trustee of the estate, the second defendant, has obtained orders from the Federal Circuit Court to the effect that he is justified in not challenging the jurisdiction of this Court to determine the claims raised in these proceedings affecting the estate, and in postponing his final determination of the provable debts of the estate and distributing its assets until the determination of these proceedings, in circumstances where the parties claiming to be the principal creditors of the estate are companies controlled by the first defendant.

   (b)As such, the proceedings do not concern the direct interpretation or application of any provision of the Bankruptcy Act.  The issues regarding the assets of the estate are to be determined by the application of common law or equitable principles concerning ownership of property and debts, not the bankruptcy legislation.

   (c)These proceedings primarily involve claims for relief under the Family Provision Act 1972 (WA), involving matters of state law which this Court is best equipped to determine, given its familiarity with that legislation.

   (d)Issues raised in these proceedings arise for determination in the related action CIV 1750 of 2017, in which the present plaintiff seeks to remove Philip and the other defendants in those proceedings as trustees of trusts which Marc controlled during his lifetime.  To that end, the plaintiff relies upon the conduct pleaded in paragraphs 9, 9A, 11, and 22 of the substituted statement of claim filed 10 November 2017 in these proceedings in Action CIV 1750 of 2017:  see paragraphs 59 to 65, 72 to 83, and 87 to 94 of the substituted statement of claim filed 10 November 2017 in Action CIV 1750 of 2017.

   (e)The transfer of these proceedings to the Federal Court would therefore result in both courts having to determine the same issues, involving a waste of judicial resources and giving rise to a real risk of inconsistent findings, as well as the duplication of costs and effort for the parties.

3. I find that those matters constitute special reasons that this court should determine this proceeding rather than transfer it to the Federal Court.  Accordingly, I am satisfied that there are special reasons to order that the proceeding be determined by this court and I will so order.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

MS
Associate to the Honourable Justice Le Miere

14 FEBRUARY 2019