Cassaniti v Official Trustee in Bankruptcy

[2005] FMCA 775

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CASSANITI & ANOR v OFFICIAL TRUSTEE IN BANKRUPTCY & ANOR [2005] FMCA 775

BANKRUPTCY – Application to require a trustee to admit a proof – notice of intention to oppose requesting court to determine the proof – where both applications misconceived.

Bankruptcy Act 1966, ss.124(4), 178

Sutherland (In the Matter of Scutts A Bankrupt) [1999] FCA 147

First Applicant: SAM PETER CASSANITI

Second Applicant: RELIANCE FINANCIAL SERVICES PTY LIMITED

First Respondent: OFFICIAL TRUSTEE IN BANKRUPTCY

Second Respondent: JOHN CAMPBELL HAWKINS

File Number: SYG3584 of 2004

Judgment of: Raphael FM

Hearing date: 31 May 2005

Date of Last Submission: 31 May 2005

Delivered at: Sydney

Delivered on: 31 May 2005

REPRESENTATION

Counsel for the Applicants: Mr I Young

Solicitor for the Applicants: Stoikovic Macri

Solicitors for the First Respondent: Sally Nash & Co

Counsel for the Second Respondent: Mr F Austin

ORDERS

1. Application dismissed, notice of opposition dismissed.

2. The second respondent’s costs assessed in the sum of $380.00 to be paid as to one half by the first and second applicants and as to the other half by the first respondent, otherwise no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG3584 of 2004

SAM PETER CASSANITI

Applicant

RELIANCE FINANCIAL SERVICES PTY LIMITED

Second Applicant

And

OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

JOHN CAMPBELL HAWKINS

Second Respondent

REASONS FOR JUDGMENT

1. On 8 December 2004 an application was filed in this court on an urgent basis by the applicants who are creditors of the bankrupt.  The application required that the respondent, the Public Trustee, admit a proof of debt and it sought interlocutory relief restraining the public trustee from holding a creditors meeting which was scheduled for the following day to consider a proposal by the bankrupt for a compromise arrangement with his creditors. 

2. As it happened, after a short hearing, the Public Trustee agreed not to hold the meeting and I gave directions in the case on 3 March. Approximately a week ago Mr Young, who appears on behalf of the applicants, came into the matter. He has had an opportunity of considering the papers and now concedes that the application was misconceived insofar as the authorities make clear that it is not for this court to require a trustee to admit a proof of debt other than pursuant to the provisions of s.178 of the Bankruptcy Act 1966 (Cth) which has not yet been engaged.

3. The respondent filed a notice of motion on 4 March 2005 seeking that the court determine the amount for which proofs of debt lodged by the applicants should be admitted pursuant to s.124(4). This application is also misconceived because it is clear from Sutherland (In the Matter of Scutts, A Bankrupt) [1999] FCA 147 that it is not for the court on a directions application to decide substantive issues between the parties. A proper and pragmatic solution to the difficulties of the parties is to ensure that the proof of debt which is in contention is dealt with by the trustee and any dispute concerning the trustee's decision is then brought before the court in the normal manner.

4. In order to ensure that this happens I believe that the best course of action is to dismiss the application, noting that Ms Nash advises me that she believes, and it is only her belief, that the trustee can deal with the proof of debt within 21 days.  If the applicant is not satisfied of the result then he can commence the appropriate proceedings.  This leaves the question of costs.  I have heard both parties on the matter of costs.  As I have said, the application in its original form was misconceived but in my view the trustee's notice of intention to oppose is equally opaque.

5. I think in the circumstances the most appropriate course of action is to make no order as to costs.  This leaves Mr Austin for the second respondent, the bankrupt himself.  He has been joined in the proceedings and is probably the only "innocent" party.  I think he should have his costs which I assess in the sum of $380.00 being two appearances at the scheduled rate of $190 each, to be payable as to one half by the first and second applicants and as to the other half by the first respondent.

I certify that the preceding five (5) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: