Corrigan v Owens (No.2)
[2008] FMCA 1370
•8 September 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CORRIGAN v OWENS (No.2) | [2008] FMCA 1370 |
| BANKRUPTCY – Application to reinstate – court not accepting reasons for non-attendance by applicant – application dismissed – further application for interim relief – no grounds shown to support application. |
| Bankruptcy Act 1966, s.179 Federal Magistrates Court Rules 2001, r.16 |
| Queensland v JL Holdings (1997) 189 CLR 146 Kostalanellis v Allen (1974) VR 596 |
| Applicant: | SUZANN OWENS |
| Respondent: | DAVID LOFTHOUSE |
| File Number: | MLG 1436 of 2004 |
| Judgment of: | Burchardt FM |
| Hearing date: | 8 September 2008 |
| Date of Last Submission: | 8 September 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 8 September 2008 |
REPRESENTATION
| The Applicant: | In Person |
| Counsel for the Respondent: | Mr M.J. O'Brien |
| Solicitors for the Respondent: | Aitken Partners Lawyers |
ORDERS
The applications filed on 21 August 2008 and on 25 August 2008 be dismissed.
The proceeding be otherwise adjourned to 19 September 2008 at 2.15 pm for consideration of arguments as to a general stay of proceedings.
The Applicant shall pay the Respondent's costs to be paid out of the Bankrupt's estate.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1436 of 2004
| SUZANN OWENS |
Applicant
And
| DAVID LOFTHOUSE |
Respondent
REASONS FOR JUDGMENT
(Revised from Transcript)
On 21 August 2008 I was due to start day one of a two-day preliminary inquiry pursuant to s.179 of the Bankruptcy Act 1966 (“the Act”). That inquiry arose from an application filed by Ms Owens on 4 April 2008 and was refined by further orders made by me on 18 April 2008.
The hearing date for 21 August had been set on 13 June 2008. At that time Ms Owens was represented by Mr Yarrow of counsel, whom I have been subsequently informed by Ms Owens herself has been appearing pro bono for her from time to time. On 21 August 2008, Mr Wolff appeared. He initially said that he was not sure if he was appearing for Ms Owens or not, and following an adjournment for him to obtain instructions he confirmed he did not so appear. Mr Wolff stayed, however, in Court and Mr Yarrow was present in Court throughout. Ms Owens did not appear and I dismissed her application for non‑attendance.
On the same day - in fact, that afternoon - Ms Owens applied to reinstate the proceedings. In her affidavit in support she deposed that both Mr Wolff and Mr Yarrow had been briefed to appear. She said she had arranged to pay Mr Wolff upon her return from hospital at lunchtime that day. She deposed that she had cancer and that the appointment was critical to her treatment. She said there had been a misunderstanding on the part of Mr Wolff and his clerk, Mr Lennon, as to the basis of the retainer; and confirmed that Mr Yarrow had not in fact been briefed in a formal sense. She sought urgent reinstatement of the proceeding.
On 25 August, Ms Owens filed an application and an affidavit. The application seeks first the consolidation of the s.179 review, if reinstated, with several other applications which are due for directions in October and which involve wide-ranging matters concerning the conduct of the Trustee. Second, she sought the payment of $50,000.00 to pay lawyers to prosecute her claims. At the bar table today Ms Owens asserted that she might have assets in excess of $2 million upon the conclusion of her bankruptcy, and it was not unreasonable that she be advanced such a sum. Third, she sought discovery in somewhat broad terms.
The affidavit in support repeats allegations of misconduct against the Trustee, some of which at least are expressly part of the posited s.179 inquiry. In paragraphs 3 and 4 of her affidavit, Ms Owens deposed to a depressive illness and the difficulties that that had caused her in her conduct of the proceeding.
Today from the bar table Ms Owens told me that she saw the surgeon on 21 August 2008 for blood tests and for an interview and examination, with an examination by her treating surgeon. She said that the appointment with the surgeon was made one week before, although I note that she has now corrected that impression. I will come back to the basis of that correction in a moment. She said further that no funds were available to her to brief counsel, and that Mr Yarrow is not an appropriate person to seek to conduct the entirety of her applications for her. She said that she was not able herself to conduct the proceeding, and she said that Mr Yarrow knew that she was not coming to court until midday on 21 August 2008 and asserted that the failure by Mr Yarrow to tell the court this on that occasion was an error on his part.
Mr Wolff attended today at my request, bearing in mind that Ms Owens' first affidavit asserted at least on one view that he was responsible for the difficulties on 21 August. He confirmed the obvious, which was that he had not appeared that day because funds had not been received to pay his fees. He asserted that he had told Ms Foster, who had been the solicitor involved, that this was so; and I am minded to accept that because it is obviously entirely consistent with what happened on the day. There would be no proper reason - no earthly reason - for Mr Wolff not to have discharged function if the fees he had requested had been paid.
Mr O'Brien for the Trustee neither opposes nor agrees to the reinstatement of the application, but he does object - and strongly - to its consolidation with the other matters to be heard in October; and he says second, there is no legal basis advanced for the $50,000.00 to be made available to Ms Owens; and thirdly he opposes the broad-ranging discovery sought.
There are a number of relevant considerations in this regard. The obvious point of departure is the authority of the High Court in Queensland v JL Holdings (1997) 189 CLR 146. That is broadly to the effect that it is appropriate to allow cases to be heard on their merits, save where there is, as it were, irremediable prejudice to another party. Here, Ms Owens' application was felt to have sufficient merit to be set down for two days, albeit that any examination of its ultimate prospects of success has not yet occurred.
Second, the power pursuant to Rule 16 of the Federal Magistrates Court Rules 2001 (“the Rules”) to reinstate is stated in the broadest discretionary terms, although I would presuppose that this Court would, broadly speaking, proceed in the manner generally adopted by State Courts in cases like Kostalanellis v Allen (1974) VR 596. Here, Ms Owens knew about the proceeding on 21 August 2008 a long time beforehand. A letter has now been provided by Sarah Kemp - and when I say "now" I mean at 2.15 pm - dated today, one suspects in response to this morning's proceeding. It asserts that Ms Kemp is the treating surgeon of Ms Owens, gives details of her health problems which I do not need to repeat on transcript, and says:
“She has been having a range of operations and systemic treatments for her condition. These treatments are complex and require close, careful and regular medical attendances at the appointed times, particularly 21 August.”
It goes on to give further details of the treatment and its effect.
This is in fact a different picture to what I was told this morning. There I was told that the attendance was for a blood test and for an interview and examination, not for an operation or a systemic treatment. In either event, whether the appointment was made by Ms Owens or made as she now tells me by the hospital, she must have known some considerable time before the 21st that she was going to receive treatment on that day, and it cannot have been impossible for her to have applied to either adjourn the proceedings or otherwise adjourn or alter the time at which she was likely to have to have the treatment, which I note was well and truly finished by the afternoon.
There is no cogent explanation or evidence from the surgeon in this letter or otherwise as to why it would not have been possible to reschedule the procedures that took place on 21 August. The complaints against Mr Wolff are not made out to the extent that they were pressed, and I note that in the ultimate it seems to be put that this matter be more a matter of misunderstanding than otherwise.
I note that as long ago as 10 May 2005 there was an issue about representation of Ms Owens. On that day, Mr Bornstein of counsel appeared in Court as a matter of courtesy to say that he was not appearing for Ms Owens, as is apparent from paragraph 7 of Phipps FM's decision given that day. I mention this because the complaints against Mr Wolff are strikingly similar in their character. There has been a pattern of adjournments with indemnity costs; at least two before Phipps FM on 22 and 23 August 2005.
Another very relevant consideration is Ms Owens' health. She is seriously ill at the moment, and it is for that that she is receiving treatment from Ms Kemp. There is no reason to doubt that the stress of these proceedings is damaging to her health generally, as her general practitioner Dr Jones has asserted, and in relation to the particular illness that she suffers.
I further note that Ms Owens has very genuine allegations against the Trustee. Contrary to her assertion this morning, this Court understands the intensity of her views about the Trustee. Her health is also as I say relevant, but generally and more particularly so too is Ms Owens' capacity to conduct the proceedings because she says that she is, although not impaired, unable effectively to conduct it. I accept that that is likely to be so.
So there are two strands to the case. There are the two applications before the Court, and then there is the interrelated issue of Ms Owens' health.
Here, dealing with the applications first, I am not prepared to exercise my discretion to reinstate the application that was dismissed on
21 August. Ms Owens knew the date. Ultimately I do not regard the evidence from the treating medical practitioners, Dr Jones and Ms Kemp, as satisfactorily explaining why it was that Ms Owens was not here. I have already dealt with the question of Mr Wolff being briefed. Ms Owens must have known or ought to have known that her attendance was vital. It was her application for an inquiry, and the first logical point of departure would have been for her to be cross‑examined on her various and numerous affidavits. She is after all a lawyer and would reasonably be understood to have known that.
Next, her entitlement to be heard is not absolute. It is ultimately a question of discretion. The court has to consider other litigants and the other party and the creditors.
Finally, although it is not a matter at the forefront of my deliberations, Ms Owens' past conduct both in relation to Mr Bornstein and other numerous adjournments, is not such as to give great satisfaction.
So for all these reasons, and bearing in mind the competing considerations and the fact that not to allow the reinstatement is of course a very important and serious matter, it seems to me a proper exercise of my discretion is not to reinstate the application.
Even if I did, I would not have been minded to re-consolidate the proceeding, because the whole point was to deal with it as a discrete issue.
Third in the various matters that are in the application, I am not prepared to order that $50,000 be advanced by the Trustee to Ms Owens. I accept Mr O'Brien's submission that no legal basis has been advanced to support this proposition, which would amount to making an interim distribution before the payment of creditors and certainly before the conclusion of the administration of the estate. This is required by Ms Owens to occur in circumstances where she would then use the funds to sue the Trustee, and it is at least as possible as otherwise - bearing in mind one or other result might be achieved either in her favour or against - that the costs would come out of her own estate in the event of an unfavourable result.
Finally, there is no proper basis to make the broadly ranging order for discovery sought.
That leaves the second issue, which is Ms Owens' health, and it is a matter of major concern. The summary of what she puts to me - and I accept it - is that it is really almost beyond her powers at the present time to conduct the litigation, not so much because of mental impairment but because of the stress and the anxiety and the general pressures she is under both in her health and otherwise. She is unfortunately not able to pay lawyers, for obvious reasons.
One possible appropriate way forward would be to stay proceedings until either a litigation guardian is appointed on application, or Ms Owens' health improves to a point where she is able properly to conduct such litigation. That would be a very unusual step, but I am not persuaded that it is something that ought not to be considered. I think it should be. Accordingly, I am going to adjourn this matter to 2.15 on 19 September 2008, at which time I will consider further whether I should generally stay these proceedings pending Ms Owens being in a position to satisfy the Court that her state of health enables her properly to continue or alternatively, until such time as an appropriate application is made and granted for the appointment of a litigation guardian.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate: Brooke Evans
Date: 8 September 2008
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