Carrafa v Gomez
[2019] FCCA 1188
•5 April 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CARRAFA v GOMEZ | [2019] FCCA 1188 |
| Catchwords: BANKRUPTCY – Application by bankrupt to adjourn matter until conclusion of matters before the High Court – whether court has power to proceed when section 75(v) application to which the presiding judge is on foot before the High Court – clear court has power to proceed – bankrupt’s attempt to avoid progression of case devoid of merit – adjournment refused. |
| Applicant: | MICHAEL CARRAFA |
| Respondent: | IRWIN GOMEZ |
| File Number: | MLG 3728 of 2018 |
| Judgment of: | Judge Burchardt |
| Hearing date: | 5 April 2019 |
| Date of Last Submission: | 5 April 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 5 April 2019 |
REPRESENTATION
| Counsel for the Applicant: | Ms Sowden |
| Solicitors for the Applicant: | Not applicable |
| Counsel for the Respondent: | Mrs Gomez (by leave) |
| Solicitors for the Respondent: | Not applicable |
ORDERS
The Respondent sign Transfers of Land and to do all things necessary to transfer one of two equal shares in the following properties:
(a)59 Hinrichsen Drive, Hallam in the State of Victoria (Certificate of Title Volume 09970 Folio 306); and
(b)2 Hatherley Grove, Altona North in the State of Victoria (Cerificate of Title Volume 05218 Folio 573)
so that the Applicant and Respondent are registered as tenants in common in equal shares in respect of both properties within seven days of being provided with Transfer of Land Forms by the applicant.
In the event that the respondent fails to comply with order one the Registrar of the Federal Circuit Court of Australia is ordered to:
(a)execute the Transfers of Land referred to in paragraph 1 in the name of the respondent; and
(b)do all acts and things necessary to give effect to the transfers of land.
The applicant to have the conduct of sale and authority to execute the transfers of land required to effect the sale.
The respondent and his family are to yield vacant possession of the property at 2 Hatherley Grove, Altona North within 120 days of these orders.
Pursuant to paragraph D above the respondent must remove from
2 Hatherley Grove, Altona North all vehicles, rubbish and chattels within 120 days of these orders.
In the event that the respondent fails to deliver up vacant possession pursuant to paragraph 5 above a writ of possession shall be issued forthwith in favour of the applicant.
The applicant be seized forthwith with authority to deal with the tenants if any of the property at 59 Hinrichsen Drive, Hallam including the authority to collect rental and serve a notice to vacate.
The applicant have the sole conduct of the sale of both properties and be authorized to instruct an agent and/or auctioneer for that purpose.
The applicant is to determine the reserve price for the sale of each property and whether the properties or either of them be sold by auction or private treaty.
The respondent do all such things as may be reasonably required by the applicant his selling agent or solicitors for the purpose of achieving a sale of the properties including providing access to buildings on the property for the purposes of valuation and viewing by potential purchasers.
The respondent be at liberty to bid at the sale of either or both properties.
The net proceeds of sale of the properties and any rental income received prior to sale after payment of any encumbrance or encumbrances according to their priorities and of all other proper costs, charges and expenses of the sale be paid to the applicant and respondent in equal shares subject to any costs order to be met out of the respondent’s share.
Subject to paragraph 12 above the proceeds of sale and any rental income be disbursed in accordance with the provisions of the Bankruptcy Act 1966.
A copy of these orders are to be served on the mortgagee or mortgagees holding security over the properties and any such mortgagee be given liberty to apply to the Court with 14 days of such service.
The respondent to pay the applicant’s costs of and incidental to this proceeding to be taxed in default of agreement.
Liberty to apply.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 3728 of 2018
| MICHAEL CARRAFA |
Applicant
And
| IRWIN GOMEZ |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
As long ago as 7 December 2016, Judge Riley made certain orders which had the net effect of vesting certain property of the bankrupt in the trustee in bankruptcy. The formal application presently before the Court is an application by the trustee to realise assets of the bankrupt, as would ordinarily be thought appropriate in gathering in the property of the bankrupt for division amongst creditors. Judge Riley’s decision was appealed to the Federal Court, and on 2 March 2018 Moshinsky J dismissed the appeal. That decision was the subject of an application for special leave, but the special leave application was dismissed on
15 August 2018. Subsequently, there have been a number of applications to the High Court.
Today, Mrs Gomez, who I have permitted to appear by leave on behalf of her husband, has made two submissions: first, she submits it is questionable whether this Court has the power to proceed in circumstances, which I will come to, where a writ has been taken out pursuant to section 75(v) seeking to prevent the Court from proceeding with the matter, and, second, in any event, the Court should not proceed until the various matters in the High Court are concluded because to do so would further involve rending the results of the appeal nugatory.
The most recent matter, it would seem, presently agitated before the High Court was an application heard by Keane J on a summons filed on 29 January 2019 by Mr Gomez in which he sought relief against Moshinsky J and against the trustee and also against a second defendant, a company with which we’re not presently much concerned. The summons sought a stay of proceedings and orders made in the trial judgment in Carrafa v Gomez, and I should say that that was, of course, the judgment of Judge Riley. It’s informative to read some of the transcript of what took place before Keane J. At page 2 of the transcript his Honour said the following:
“Now, this is your opportunity to say anything further that you wish to say in support of your summons of 29 January 2019. In inviting you to do that, I should say that insofar as your summons is concerned it may be the case that your side is proceeding on the assumption that merely filing the application to show cause somehow or other undoes or renders void in some way the judgment of Moshinsky J. That assumption is not correct.”
The matter was revisited at pages 3 to 4 of the transcript where his Honour went on to say:
“Now, that means in order to succeed today with your application for a stay you need to show that there is a serious prospect that the decision of Moshinsky J will be set aside. Your principal difficulty in that regard is that the decision is that your side sought leave to appeal from that decision and leave was refused. For you now to seek to set aside that decision by your new proceedings is, on the face of things, an abuse of process.”
He invited submissions about that concern. His Honour went on to give a ruling which set out the history of the matter and concluded, relevantly, on page 10:
“The mere commencement of proceedings asserting jurisdictional error on his Honour’s part is no basis on which to ignore the judgment.
Further, the attempt now to relitigate those issues that were finally concluded by this Court’s refusal of special leave to appeal is a clear abuse of the processes of the Court. There is no prospect that this Court will entertain such an abuse of process. Such an abuse of process cannot be allowed to impede the third defendants in the exercise of the rights established by the judgment of Moshinsky J. Accordingly, the plaintiff’s summons of 29 January should be dismissed.”
That decision itself has been the subject of an application by way of appeal to a Full Court but has not yet been determined. A new application for a writ was filed on 19 March 2019 to which the respondents are myself, as a judge of this Court, once again, the company JNGO Pty Ltd and the trustee. I have been informed by the registry of the Court that I have filed the submitting appearance, and, of course, that must be so. The grounds set out in the writ filed on 19 March 2019 appear to me to raise matters identical to those which Keane J refused in his decision. It is said today that there is jurisdictional error and that the appeal from Keane J’s decision or any other outstanding matters in the High Court will ultimately be successful, and this is based on the assertion that Moshinsky J fell into jurisdictional error.
Counsel for the trustee submits that one can peruse all the documents filed by the Gomez family, but there is no indication of any jurisdictional error, as such. Having read, albeit relatively quickly, the materials that I had been handed by Mrs Gomez today, the nearest one gets to an articulation of jurisdictional error is in an outline of submissions by the plaintiff filed on 28 August 2018. One has to say that they do not, at least to my reading, indicate jurisdictional error, as that phrase would be comprehended within the sphere of administrative law in this country.
There is, however, a further point. Albeit that Keane J was concerned with an application in which a justice of the Federal Court was concerned, the Federal Court plainly being the superior court of record where this is merely a court of record, his Honour’s observations seem to me to be directly on point to this extent: his Honour asserted that the mere filing of a writ under section 75(v) does not mean that the decision or operation of the courts below are, as it were, automatically stayed. I do not accept that it is questionable whether I have power to proceed. On the contrary, I am quite clear that I have. Self-evidently, should the High Court make any kind of order that affected my conduct of the matter, I would, of course, immediately comply. Furthermore, although, obviously, the disposition of matters in the High Court will be a matter for the High Court, it needs to be borne in mind that Keane Js remarks would seem to me to, at first blush, have general application to those other matters likely to be before the High Court, and certainly his Honour’s comments were very clear. I would regard myself as bound to follow them, in any event
That leaves the second aspect of the matter, whether the continuation of the matter before this Court might render the applications in the High Court nugatory. Of course, in principle that is potentially correct, but it needs to be borne in mind that the appeal before Moshinsky J was unsuccessful. Special leave was not granted, and one judge of the High Court has already made remarks which would appear to suggest that the likely outcome of the High Court proceedings is not going to be beneficial to the Gomez interests. The matters in the High Court suggest a collateral attack upon the conclusive determination of the Moshinsky appeal, by the disposition of the matter in which special leave was sought.
To the extent, therefore, that that matter is raised I regard it as being of insufficient force for the Court not to proceed, and I note, as counsel rightly submits, the timeframe the trustee seeks to have imposed would leave it well open to the Gomez interests to pursue any further application as they may be advised. So for those reasons I decline to adjourn the proceedings until after the disposition of the matters in the High Court which is, in substance, the application that has been made.
For reasons I gave a short while ago I have not acceded to the respondent’s application to adjourn the hearing and determination of this matter until after certain proceedings in the High Court are concluded. That leaves, therefore, before the Court the application filed by the trustee on 23 October 2019. The orders sought in that application are what might fairly be described as machinery orders designed to realise the bankrupt’s interest in certain properties to have them available, of course, in the administration of the bankrupt’s estate. The trustee has indicated one or two minor amendments possibly to the form of orders sought.
In oral submissions Mrs Gomez, who appears by leave for Mr Gomez, submitted that the equal division of the property which is what is contemplated by the trustee’s application has never been determined. It is significant to note that on 12 February 2019 Mr Gomez filed a notice stating his grounds of opposition to the application, interim application or petition, and the grounds of his opposition are stated as follows: this matter should not and cannot proceed any further in the Federal Circuit Court. The reasons are detailed in the High Court documents filed in the matter now attached as affidavit material. That ground, of course, was the one I heard and determined earlier today adversely to the position of the Gomezes.
It is far too late to raise a matter of this sort now. I point out that Mrs Gomez impresses me as being by no means unsophisticated or inexperienced in legal matters. If there was to have been some assertion that in some fashion the ownership of these properties had, as Mrs Gomez put it, zero in it for her, then these matters should have been dealt with in the proceedings before Judge Riley. Without perhaps being definitive about it, there would seem to be a strong Anshun estoppel point. However, I note that in her Honour’s decision at paragraphs 14 and following Judge Riley described a current title search of the relevant property showing that the Altona property was registered in the names of the bankrupt and Irwin Gomez on 5 August 2002. It showed that the Altona property was transferred from the bankrupt and Irwin Gomez to Irwin Gomez alone on 25 June 2014. That transaction, of course, was declared void as against the trustee by Judge Riley.
The ownership of the other property with which we are concerned appears to have been on the same footing. The judgment does not state in terms that the judgments were joint tenancy, but it is absolutely obvious that had there been tenancies in common in unequal shares her Honour would have said so. It is correct, as counsel for the trustee submits, that the bankruptcy of Mrs Gomez by operation of law brought the joint tenancy to an end. Of its nature joint tenancies are necessarily equal in shares because each party together owns the whole property, unlike tenancies in common where each party individually owns such proportion of the property as the tenancy in common gives them. Put shortly, as a matter of law, the parties are equal owners of the property.
Furthermore, I note that there were very substantial proceedings before Judge Riley going to support the thesis that in some fashion the proper apportionment of the property ought be in other proportions. A substantial argument was run on the basis of the equity of exoneration. It was comprehensively rejected by her Honour, and her Honour was comprehensively upheld by Moshinsky J. In these circumstances I do not think that the argument now sought to be raised never articulated in any kind of way until this morning, should succeed and, indeed, cannot do so.
Accordingly, there will be orders, essentially, as sought by the trustee save that I think Mr Gomez should be given an opportunity to sign the necessary documentation, but since it is unlikely that he will do so, rather than seeking to make an order binding the register of titles, as sought in order B, bearing in mind that the registrar is not a party to the proceedings, I will make an order that in the event of default a registrar be requested to sign, and should that prove ineffective then the matter will have to come back under the liberty to apply with the registrar joined in.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.
Date: 7 May 2019
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