Charan v Bruce Gleeson in His Capacity as the Trustee of the Bankrupt Estate of Prashant Prashikar Charan
[2011] FMCA 1030
•22 December 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CHARAN v BRUCE GLEESON IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF PRASHANT PRASHIKAR CHARAN | [2011] FMCA 1030 |
| BANKRUPTCY – Application for review of Registrar’s decision dismissing an Application to set-aside a Bankruptcy Notice. PRACTICE AND PROCEDURE – Disqualification – in view of adverse comments made in relation to the credit of the Applicant, whether the Court should disqualify itself from hearing and determining a further issue – disqualification application granted in relation to the application to set aside the Bankruptcy Notice. |
| Bankruptcy Act 1966, ss.120, 121, 178 |
| British American Tobacco Australia Services Ltd v Laurie [2011] HCA 2 Charan v Gleeson [2010] FMCA 703 Ebner v Official Trustee in Bankruptcy [2000] HCA 63 Gleeson v Charan & Anor [2011] FMCA 729 Hearst v Hearst [2011] FamCA 470 Michael Wilson Partners Limited v Nicholls [2011] HCA 48 Re a debtor (1930) 2 ABC 164 |
| Applicant: | USHA WATI CHARAN |
| Respondent: | BRUCE GLEESON IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF PRASHANT PRASHIKAR CHARAN |
| File Number: | SYG 1045 of 2011 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 15 December 2011 |
| Delivered at: | Sydney |
| Delivered on: | 22 December 2011 |
REPRESENTATION
| Counsel for the Applicant | Mr de Robillard |
| Solicitors for the Applicant: | Kent Attorneys |
| Counsel for the Respondent: | Mr J. O’Conner |
| Solicitors for the Respondent: | Gillis Delaney |
ORDERS
Pursuant to the inherent jurisdiction of the Court and on the Application of the debtor, Federal Magistrate Lloyd-Jones recuses himself from these proceedings.
Costs reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1045 of 2011
| USHA WATI CHARAN |
Applicant
And
| BRUCE GLEESON IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF PRASHANT PRASHIKAR CHARAN |
Respondent
REASONS FOR JUDGMENT
Before the Court is an application brought by Mrs Charan to have Bankruptcy Notice Number 2475 of 2011 set aside. The current proceedings arose from a judgment from a costs order that the Respondent obtained against the Applicant on 25 August 2010. On
25 August 2010 Federal Magistrate Barnes delivered a judgment in relation to the proceedings SYG80/2010 in the matter of Usha Wati Charan v Gleeson and ordered the Applicant, Mrs Usha Wati Charan pay the Respondent Bruce Gleeson’s costs.
During proceedings number SYG2369/2010 which were a separate action between the same parties to the current proceedings, the parties brought to my attention to the issue that proceedings in respect to a Bankruptcy Notice were before the Court so I issued the instructions that those proceeding be transferred to my docket to ensure that they did not proceed until the matter before me at that stage had been finalised. I shall return to the outcome of proceedings SYG2369/2010 below.
On 21 October 2011 the current proceedings (SYG1045/2011), which were transferred until the resolution of proceedings SYG2369/2010, was listed for mention before me and I adjourned those proceedings to the 21 October 2011 to be heard before a registrar of this Court. On
31 October 2011 the matter was before Registrar Morgan who heard submissions in respect to the Application to set-aside the Bankruptcy Notice that had been filed in these proceedings on 22 May 2011. After hearing argument, Registrar Morgan ordered that Mrs Charan’s Application to set-aside the Bankruptcy Notice be dismissed and that Mrs Charan pay Mr Gleeson’s costs.
On 21 November 2011 Mrs Charan filed an Application for review of the decision made by Registrar Morgan in the following form:
1. That the orders or Registrar Morgan made on 31 October 2011 be and hereby are stayed.
2. That the Application filed on 23 May 2011 for stay of Bankruptcy Notice be reinstated for hearing.
3. That the Bankruptcy Notice be and is hereby stayed pending determination of the appeal lodged by the Applicant in the Federal Court of Australia (NSD1761/2011).
4. That the Respondent pay the Applicant’s costs of these proceedings.
Background to proceedings SYG 2369/2010
These proceedings were brought by Bruce Gleeson in his capacity as trustee for the bankrupt estate of Prashant Prashikar Charan against the Bankrupt’s parents, Mrs Usha Wati Charan and Mr Prabhakar Charan for an order pursuant to ss.120 and 121 of the Bankruptcy Act 1966 (Cth) that the transfer of property from the Bankrupt to his parents was void against the Trustee. In that decision, Gleeson v Charan & Anor [2011] FMCA 729, I set out in some detail the litigation background between these two parties. I handed the judgment down on 21 September 2011 with orders made in favour of Mr Gleeson. The Charans filed a Notice of Appeal against that decision on 12 October 2011, however that appeal, which is yet to be heard, has no direct bearing or relevance on the current proceedings.
Background to proceedings SYG80/2010
On 25 August 2010 her Honour Federal Magistrate Barnes heard and delivered judgment in Charan v Gleeson [2010] FMCA 703. This was an application for orders to the administration to the bankrupt estate of the son of Mrs Charan and whether the mother of the Bankrupt who is the co-owner of a property was effected by an act, omission or decision of the trustee within s.178 of the Bankruptcy Act 1966 and when Mrs Charan became aware of the act, omission or decision in question. Her Honour dismissed that application and made an order that Mrs Charan pay the costs of Mr Gleeson as agreed, and in the absence of agreement, taxed in accordance with the Federal Court Rules.
Mr Gleeson filed a party-party bill of costs on 20 December 2010 pursuant to the orders of Federal Magistrate Barnes dated 25 August 2010. The total cost set out in the bill of costs was in the sum of $24,104.24. A certificate of taxation was issued by the Federal Magistrates Court on 24 December 2011 certifying that the party-party costs of Mr Gleeson’s application was in the sum of $19,534.00.
Mrs Charan has not paid the costs of Mr Gleeson.
A letter was addressed to LAC Lawyers, who at this stage represented Mrs Charan, dated 28 February 2011 attaching a sealed copy of the certificate of taxation in the sum of $19,534.00 requesting a payment to be made within 14 days. In reliance of the judgment of Federal Magistrate Barnes and a cost determination in the amount of $19,534.00 and Mrs Charan’s failure to pay these costs, Mr Gleeson issued a Bankruptcy Notice against Mrs Charan. The Bankruptcy Notice dated 11 April 2011 was served upon Mrs Charan on 1 May 2011. An Affidavit of Stephen Goodwin sworn 9 May 2011 attests to that personal service.
Application for disqualification
On 15 December 2011 at the scheduled hearing of the Application for review, Mr de Robillard, counsel appearing for Mrs Charan, made an application seeking my disqualification from further hearing the matter because of my adverse decisions in respect to Mrs Charan’s credit in proceedings SYG2369 of 2010. Mr de Robillard relied on the authorities of Hearst v Hearst [2011] FamCA 470 and the High Court decision in British American Tobacco Australia Services Ltd v Laurie [2011] HCA 2. In that decision the majority of their Honours Heydon, Kiefel and Bell JJ found that an apprehension of bias rule disqualified the trial Judge from hearing the proceedings in that matter. Their Honours noted that not at any stage had it been alleged or could it be seen that his Honour (Curtis J of the Dust Diseases Tribunal of NSW) displayed actual bias. The rule requires a judge not to sit to hear a case if a fair minded lay-observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question that the judge is required to decide (at [104]). Further, the recent High Court decision in Michael Wilson Partners Limited v Nicholls [2011] HCA 48 at [63] reiterated the plurality principles identified in the decision in Ebner v Official Trustee in Bankruptcy [2000] HCA 63:
“…the plurality pointed out [at [14]] that application of the apprehension of bias principle requires two steps. First, it requires the identification of what it is said might lead the judge to decide a case other than on its legal and factual merits. And second, there must be an articulation of the logical connection between that matter and the feared deviation from the course of deciding the case on its merits”.
Unfortunately, throughout both of the proceedings before me involving the Charans and Mr Gleeson, there have been a number of delays and adjournment applications brought by Mrs Charan either on the basis that she was not represented by a legal practitioner because practitioners had withdrawn, or that the Charans were seeking to find new representation and on a number of occasions that the newly appointed representative had not yet had an opportunity to receive full instructions. This set of circumstances began to form a repeated pattern which resulted in the expression of frustration from the legal representatives of Mr Gleeson and the Court. On a number of occasions I had to warn Mrs Charan that at the next scheduled hearing the matter would have to proceed because of the pattern of delay due to adjournment applications. On the 15 December 2011 when Mr de Robillard sought yet a further adjournment of these current proceedings I repeated the concerns that the Court had in respect of yet another application for adjournment made by him. It was at this point that Mr de Robillard made the application for me to disqualify myself.
The learned authors of Insolvency: Personal and Corporate Law and Practice, Andrew Keay and Michael Murray, 4th Ed Law Book Co. address the aims of insolvency law which must involve the consideration of the position and concern of the debtor, her, his or its creditors and the general community: Re a debtor (1930) 2 ABC 164 at 166 – 167. Insolvency law must seek to balance the interests of these parties. Undoubtedly where we have a society, such as that in Australia which relies heavily on credit, there is a need for insolvency procedures to cater for those who have grave difficulties in surviving (Cork report, para.198). The authors identify the main principles as including:
a)To provide an equal, fair and orderly procedure in handling the affairs of insolvents ensuring that creditors receive an equal and equitable distribution of the assets of the debtor. This is the pari passu principle of insolvency law which is generally regarded as being the foremost principle of insolvency law;
b)To provide procedures to ensure that debts are satisfied with as little delay and expense as possible;
c)To ensure that administrations are conducted in an independent and competent manner;
d)To provide mechanisms which allow for treatment of the affairs of the insolvents before the position of insolvents become hopeless;
e)To provide procedures which enable the debtor and the creditor to be involved in the resolution of the insolvency problem; and
f)To ascertain the reasons for the insolvency and to provide mechanisms which allow for the examination of the conduct of the insolvents and their associates.
In the administration of these proceedings before me I have been forced to issue a number of warnings to Mrs Charan in an attempt to finalise the matter without undue delay and the accumulation of considerable expense. Mrs Charan has been advised that each application for an adjournment will result in a costs order being awarded to the other side as they have been present in Court, ready to proceed, and have been forced to go to the expense of preparation for the hearing which in effect is thrown away due the various adjournments. I believe a situation has arisen that if I do not withdraw from these proceedings it will initiate a further round of delays as the Charans pursue the avenues of appeal in respect of the alleged apprehended bias on my part. By withdrawing I immediately eliminate further unnecessary delays for the trustee in his attempts to the resolve the administration of this estate. Consequently I refer this back to the Registry for the allocation to a new docket.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM
Date: 22 December 2011
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