Cooper v Mastrullo - [2019] FCCA 303

FEDERAL CIRCUIT COURT OF AUSTRALIA

COOPER & ANOR v MASTRULLO & ANOR

[2019] FCCA 303

Catchwords:
BANKRUPTCY – Application pursuant to section 55(3) of the Bankruptcy Act – leave to take proceedings against bankrupt in District Court proceedings – District Court proceedings commenced prior to bankruptcy and after evidence completed but prior to delivery of judgment – application pursuant to section 120 of the Bankruptcy Act – trustee has commenced proceedings seeking to void antecedent transaction in respect of matter related to District Court proceedings – matters to be considered.

Legislation:

Bankruptcy Act 1966 (Cth), ss.19(1) 58, 120

Cases cited:

Koutavas v Struthers [2011] FCA 322
Fraser v Commissioner of Taxation: [1996] 69 FCR 99
Hudson v Sigalla [2015] FCAFC 140

Applicant:

NICHOLAS DAVID COOPER (IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF ALICIA DE PALMA & ELBIO PEREZ)

Respondent:

ROCKY MASTRULLO & ANOR

File Number:

ADG 366 of 2017

Judgment of:

Judge Brown

Hearing date:

29 January 2019

Date of Last Submission:

29 January 2019

Delivered at:

Adelaide

Delivered on:

12 February 2019

REPRESENTATION

Counsel for the Applicant:

Mr McGrath

Solicitors for the Applicant:

Ezra Legal

Counsel for the Respondent:

Mr Ryder

Solicitors for the Respondent:

O’Loughlins Lawyers

ORDERS

Leave is granted to the respondents, pursuant to section 58(3) of the Bankruptcy Act 1966 (Cth), to take fresh steps in and conclude the judgment in District Court of South Australia proceedings No 1048/2016.
Each parties’ costs of these proceedings are reserved to the resolution of the application brought by the applicant trustee pursuant to section 120 of the Bankruptcy Act 1966 (Cth).
The applicants and Rocktan Pty Ltd file a response and any necessary supporting affidavit material in respect of the section 120 application within 35 days of today’s date.
The applicant trustee is given leave to relist the matter on short notice to make any application in respect of the monies currently held in the suitors fund of the District Court of South Australia in proceedings No 1048/2016 particularly whether they should be held in this court pending the finalisation of the proceedings brought by the trustee in this court pursuant to section 120 of the Bankruptcy Act 1966 (Cth).
Further consideration of the matter is otherwise adjourned for further directions to 9 April 2019 at 9:30am.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT ADELAIDE

ADG 366 of 2017

NICHOLAS DAVID COOPER (IN HIS CAPACITY AS THE TRUSTEE OF THE BANKRUPT ESTATE OF ALICIA DE PALMA & ELBIO PEREZ

Applicant

And

ROCKY MASTRULLO & ANOR

Respondent

REASONS FOR JUDGMENT

Introduction

In 1976, Albio Perez and his partner Alicia De Palma[1] began a patisserie and café business, which baked and sold specialty cakes for distribution to cafés in Adelaide. They had premises at Newton. The business was operated through a trust, with a corporate trustee.
[1] Hereinafter referred to as “the bankrupts”
In 2014, Mr Perez decided he wanted to expand his business and needed capital to do so. His idea was to open a café…

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 Cooper v Mastrullo

Details

AGLC: Cooper v Mastrullo [2019] FCCA 303
Case: [2019] FCCA 303
Decision Date: 12 February 2019

CaseChat Overview and Summary

In *Cooper v Mastrullo*, heard in the Federal Court of Australia, the applicant sought leave pursuant to section 55(3) of the *Bankruptcy Act 1966* (Cth) to continue District Court proceedings against the respondent, who had been declared bankrupt. These District Court proceedings had been commenced prior to the respondent's bankruptcy, with evidence having been completed but judgment not yet delivered.

The primary legal issue before the Court was whether to grant the applicant leave to continue the District Court proceedings. This determination required consideration of the matters outlined in section 55(3) of the *Bankruptcy Act*, including the stage of the proceedings, the potential prejudice to the bankrupt estate, and the interests of the applicant. A related issue arose from the trustee's separate application under section 120 of the *Bankruptcy Act* to void an antecedent transaction connected to the District Court proceedings, which the Court also had to consider in its overall assessment.

Judge Brown reasoned that the District Court proceedings were at a very advanced stage, with the evidence having been fully presented and the matter awaiting judgment. The Court noted that the trustee's application to void an antecedent transaction was related to, but distinct from, the applicant's claim in the District Court. Balancing the interests of the applicant in obtaining a judgment against the potential impact on the bankrupt estate, the Court determined that it was appropriate to grant leave to continue the District Court proceedings. The Court's decision was guided by the principle of allowing a creditor to pursue a claim that was substantially advanced prior to the bankruptcy, provided that the administration of the bankrupt estate would not be unduly prejudiced.

Orders