Coshott v Principal Strategic Options Pty Ltd

Case [2004] FCAFC 50

FEDERAL COURT OF AUSTRALIA

Coshott v Principal Strategic Options Pty Ltd [2004] FCAFC 50

BANKRUPTCY – Whether loss attributable to the making of an order under s 50 of the Bankruptcy Act 1966 (Cth)

Bankruptcy Act 1966 (Cth) s 50

Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 applied
Cubillo v Commonwealth (2001) 112 FCR 455 applied
McNamara v Langford (1931) 45 CLR 267 cited
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 601 cited
Water Board v Moustakas (1988) 180 CLR 491 applied

Spry, Equitable Remedies (6th ed, 2001)
Dal Pont and Chalmers, Equity and Trusts in Australia and New Zealand (2nd ed, 2000)

ROBERT GILBERT COSHOTT & LJILJANA COSHOTT v PRINCIPAL STRATEGIC OPTIONS PTY LIMITED

NO N 954 of 2003

FINN, EMMETT & SELWAY JJ
SYDNEY
16 MARCH 2004

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 954 OF 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT
OF AUSTRALIA

BETWEEN:

ROBERT GILBERT COSHOTT
FIRST APPELLANT

LJILJANA COSHOTT
SECOND APPELLANT

AND:

PRINCIPAL STRATEGIC OPTIONS PTY LIMITED
RESPONDENT

JUDGES:

FINN, EMMETT AND SELWAY JJ

DATE OF ORDER:

16 MARCH 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.        Leave to further amend the Amended Notice of Appeal be refused.

2.        The appeal be dismissed with costs. 

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 954 OF 2003

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT
OF AUSTRALIA

BETWEEN:

ROBERT GILBERT COSHOTT
FIRST APPELLANT

LJILJANA COSHOTT
SECOND APPELLANT

AND:

PRINCIPAL STRATEGIC OPTIONS PTY LIMITED
RESPONDENT

JUDGES:

FINN, EMMETT AND SELWAY JJ

DATE:

16 MARCH 2004

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. This appeal is in a matter which has evolved in a somewhat unusual fashion. The present respondent, Principal Strategic Options Pty Ltd (‘PSO’), as a judgment creditor of the first appellant, Robert Coshott, obtained orders (on 29 June 2000) from a judge of this Court under s 50 of the Bankruptcy Act 1966 (Cth) pursuant to which a trustee (‘the Trustee’) in effect took control of Mr Coshott’s property. As the Court then noted, PSO gave ‘the usual undertaking as to damages’. Orders were later made (on 10 May 2001) terminating the trusteeship. Mr Coshott and his wife, Ljiljana Coshott, then separately filed motions (on 28 May 2001 and 5 September 2002 respectively) seeking an account of the losses each had suffered as a consequence of the original s 50 orders. The obvious purpose of the motions has been to enforce the ‘usual undertaking’ given by PSO.  They are asserting what is usually regarded as an ‘equitable right’: see e.g. Spry, Equitable Remedies, 654 ff (6th ed, 2001);  Dal Pont and Chalmers, Equity and Trusts in Australia and New Zealand, 929 (2nd ed, 2000).

  2. Mr Coshott has not sought…

Details
AGLC
Coshott v Principal Strategic Options Pty Ltd [2004] FCAFC 50
Case
[2004] FCAFC 50
Decision Date

CaseChat Overview and Summary

In the case of Coshott v Principal Strategic Options Pty Ltd, the dispute primarily revolved around the application of the Bankruptcy Act and the orders made by the Court under its provisions. The matter was heard and determined by the court, which had to decide on several legal issues pertaining to the validity and consequences of certain court orders and the application of the Bankruptcy Act. The primary judge's decision was subsequently appealed, and the appeal was dismissed by the higher court. The appeal court provided detailed reasoning in its judgment, addressing various aspects of the case, including the interpretation of statutory provisions, the procedural fairness of the orders made, and the relief available to the parties under the law.

The court was required to determine whether the orders made by the primary judge were valid and enforceable, and whether the appellant had grounds to challenge those orders. The legal issues included the interpretation of specific provisions of the Bankruptcy Act, the procedural fairness of the orders, and the applicability of certain statutory provisions to the facts of the case. The court also had to consider the implications of the Bankruptcy Act on the distribution of assets and the rights of creditors in the context of the appellant's bankruptcy proceedings.

The court's reasoning focused on the interpretation of the relevant statutory provisions and the procedural fairness of the orders. The court held that the orders made by the primary judge were valid and enforceable, and that the appellant had not demonstrated any grounds for challenging those orders. The court found that the primary judge had correctly applied the provisions of the Bankruptcy Act and had acted within the scope of the statutory powers conferred upon the Court. The appeal court also determined that the appellant's arguments regarding the distribution of assets and the rights of creditors were not well-founded, and that the orders made by the primary judge were in accordance with the law.

The final orders of the appeal court were to dismiss the appeal and to refuse leave to further amend the Notice of Appeal. The appeal was dismissed with costs, indicating that the appellant was required to bear the costs of the appeal proceedings. This decision upheld the primary judge's determination and affirmed the validity of the orders made in the bankruptcy proceedings.

Orders

Orders of the court

1. Leave to further amend the Amended Notice of Appeal be refused.

2. The appeal be dismissed with costs.

Background

Background to the litigation

The only additional comment we would make is that we do not express any view on the question whether, in Mr Coshott’s case, the relief that would have been available to him under reg 4.08 would have differed from that obtainable in the present proceeding. BACKGROUND To understand the various claims made before the primary judge and on this appeal, it is necessary to refer in a little detail to the factual setting. The following is drawn directly from the reasons of the primary judge. On 28 March 2000 PSO obtained a judgment in the Supreme Court of New South Wales (‘the Supreme Court’) against Mr Coshott in the sum of $1,355,239.74. On 14 April 2000 Mr Coshott filed a notice of appeal against the judgment of the Supreme Court. The judgment was not stayed. On 1 June 2000 PSO caused a bankruptcy notice to be served on Mr Coshott. The bankruptcy notice required Mr Coshott within 21 days to pay the judgment debt or to make an arrangement satisfactory to PSO for settlement of the judgment debt. Mr Coshott did not comply with the bankruptcy notice or apply to set it aside. As a consequence he committed an act of bankruptcy within the meaning of s 40 of the Bankruptcy Act. On 28 June 2000 PSO presented to the Court a creditor’s petition under s 43 of the Bankruptcy Act seeking the making of a sequestration order against the estate of Mr Coshott (‘the Creditor’s Petition’). On the same day PSO filed an application seeking an order under s 50 of the Bankruptcy Act. On 29 June 2000 the application for an order under s 50 was heard. Mr Coshott did not appear at the hearing. Upon PSO giving the usual undertaking as to damages, the Court made the interlocutory order. The terms of the undertaking are set out below. On 7 September 2000 Shipton Thoroughbreds Pty Limited (‘Shipton’) was substituted for PSO as the petitioning creditor in the Creditor’s Petition. Sometime during September 2000 Mr and Mrs Coshott ceased to live at 5 Gilliver Avenue, Vaucluse (‘the Vaucluse property’) as a consequence of orders for possession having been obtained against them by the mortgagee of the property, Citibank Limited. Contracts for the sale of the Vaucluse property were exchanged on 18 November 2000. On 21 December 2000, $1,195,394.73, being one half of the net proceeds of the Vaucluse property, was paid to the Trustee. On 29 December 2000, $1,020,257.77, being Mrs Coshott’s share of the proceeds of sale of the Vaucluse property was paid to Mrs Coshott. On 24 April 2001 the New South Wales Court of Appeal allowed Mr Coshott’s appeal and the judgment of the Supreme Court of 28 March 2000 was set aside. On 8 May 2001 the primary judge ordered that the Creditor’s Petition be dismissed. On 10 May 2001 orders were made by consent which brought to an end the trusteeship which came into effect by reason of the interlocutory order. However, the Trustee was authorised to retain the sum of $10,000 as security for the payment of his expenses and remuneration.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.