Coumanios v Giunti

Case [2017] FCA 678

FEDERAL COURT OF AUSTRALIA

Coumanios v Giunti [2017] FCA 678

File number(s): NSD 1370 of 2014
Judge(s): PERRY J
Date of judgment: 16 June 2017
Catchwords: BANKRUPTCY – where applicants/former bankrupts failed to disclose properties in Greece – where properties in Greece sold without leave under s 58(3), Bankruptcy Act 1966 (Cth) – whether applicants lack standing to seek relief to protect property of bankrupt estate – whether monies acquired by unauthorised sale of Greek properties belonged in justice and equity to applicants – whether applicants entitled to costs in relation to payment of monies from sale of the properties into Court – application dismissed
Legislation:

Bankruptcy Act 1966 (Cth), ss 5, 58(3), 116, 118, 126

Evidence Act 1995 (Cth) s 136

Federal Court Rules 2011 (Cth), r 2.43

Cases cited:

Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662

Bagshaw v Scott [2002] FCAFC 362; (2002) 126 FCR 27

Barcelo v Electrolytic Zinc Co of Australasia Ltd (1932) 48 CLR 391

Boaler v Power [1910] 2 KB 229

British South Africa Co v Companhia de Mocambique [1893] AC 602

Cummings v Claremont Petroleum NL (1996) 185 CLR 124

David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353

Elali v Mahrs [2013] NSWSC 1883

Deschamps v Miller [1908] 1 Ch 856

In re Levy’s Trusts (1885) 30 Ch D 119

O’Donnell v Reichard [1975] VR 916

Pavey & Matthews (1987) 162 CLR 221

Re Doyle (1993) 41 FCR 40

Re Pascoe [1944] 1 Ch 219

Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121

Thistlethwayte v Gender Estates Pty Ltd (1976) 8 ALR 700

Universal Distributing Co Ltd (In Liq) (1933) 48 CLR 171
Date of hearing: 29 March 2016
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 80
Counsel for the Applicants: Mr B Debuse
Solicitor for the Applicants: McKell’s Solicitors
Counsel for the First Respondent: Mr TS Hale SC
Solicitor for the First Respondent: Diamond Conway Lawyers
Counsel for the Second Respondent: Ms S Golledge
Solicitor for the Second Respondent: Lander & Rogers Lawyers

ORDERS

NSD 1370 of 2014
BETWEEN:

FROSSO COUMANIOS

First Applicant

STANLEY CHARLES COUMANIOS

Second Applicant

JOHN COUMANIOS

Third Applicant
AND:

GIUSEPPE GIUNTI

First Respondent

MAXWELL PRENTICE (IN HIS CAPACITY AS TRUSTEE OF THE PROPERTY OF FROSSO COUMANIOS, STANLEY CHARLES COUMANIOS AND JOHN COUMANIOS FORMER BANKRUPTS)

Second Respondent

JUDGE:

PERRY J

DATE OF ORDER:

16 JUNE 2017

THE COURT ORDERS THAT:

1.The interlocutory injunction made on 12 January 2015 is vacated. 

2.The application is dismissed.

3.Pursuant to rule 2.43 of the Federal Court Rules 2011 (Cth), the Court is to pay to the Second Respondent all of the sales proceeds paid into Court by the First Respondent pursuant to the orders made on 17 June 2015.

4.The First Respondent is released from the undertaking given by him to the Applicants which is noted…

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AGLC
Coumanios v Giunti [2017] FCA 678
Case
[2017] FCA 678
Decision Date

CaseChat Overview and Summary

In Coumanios v Giunti, the applicants, who were former bankrupts, sought various orders regarding properties in Greece. They argued that they were entitled to the proceeds from the sale of certain properties, and sought a permanent stay against the second respondent from realising other properties in Greece. The court considered whether the applicants had standing to seek relief to protect property of the bankrupt estate, and whether monies acquired by the unauthorised sale of Greek properties belonged in justice and equity to the applicants.

The court held that the applicants did not have standing to seek some of the relief claimed in their statement of claim, but that they did have standing in relation to the claim for a declaration that the proceeds of sale of the four properties on Lesbos were property of the applicants. However, the court found that the applicants had no entitlement to the proceeds of sale of those properties, as they were vested in the trustee of the bankrupt estates. The court also held that the applicants were not entitled to costs in relation to the payment of monies from the sale of the properties into court.

The court dismissed the application and ordered that the court pay to the trustee all sales proceeds paid into court by the first respondent. The court further ordered that the first respondent is to advise the court as to his position regarding an order sought in his interlocutory application, following delivery of the judgment. The court also made orders relating to costs and the interlocutory injunction made on 12 January 2015.

Orders

Orders of the court

1. The interlocutory injunction made on 12 January 2015 is vacated.

2. The application is dismissed.

3. Pursuant to rule 2.43 of the Federal Court Rules 2011 (Cth), the Court is to pay to the Second Respondent all of the sales proceeds paid into Court by the First Respondent pursuant to the orders made on 17 June 2015.

4. The First Respondent is released from the undertaking given by him to the Applicants which is noted at paragraph 8(i) of the orders made on 12 January 2015.

5. In the event that the First Respondent wishes to press for the order sought in paragraph 1 of his interlocutory application filed on 15 March 2016, the First Respondent and, if the Second Respondent wishes to be heard, the Second Respondent, are to file and serve short written submissions in support of the order on or before 4pm on 7 July 2017.

6. The issue of whether it is appropriate for the order referred to in paragraph 5 above to be made is to be determined on the papers.

7. Costs are reserved.

8. In the event that the parties are not agreed as to the appropriate order as to costs, the issue of costs will be determined on the papers.

THE COURT NOTES THAT:

9. On or before 4pm on 28 June 2017, the legal representatives for the First Respondent are to advise the parties and the associate to Justice Perry as to whether the First Respondent wishes to press for the order sought in paragraph 1 of his interlocutory application filed on 15 March 2016.

10. The Applicants do not have any interest so as to require them to be heard on whether the order sought in paragraph 1 of the First Respondent’s interlocutory application filed on 15 March 2016 is made.

11. On or before 4pm on 30 June 2017, the legal representatives for the Applicants are to advise the parties and the associate to Justice Perry as to whether they wish to contest an order to the effect that the Applicants are to pay the costs of the First and Second Respondents as agreed or assessed.

12. In the absence of agreement as to the appropriate order as to costs, the parties are to liaise to agree a timetable for the filing of short written submissions as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Finally, the affidavit of Roger Perry, an accountant who represented Mr Giunti, was tendered as an exhibit by the applicant (exhibit A4) but was not read, and was received subject to relevance. I note that the affidavit had been filed by the first respondent in compliance with orders of the Court made on 17 June 2015 requiring him to file and serve an affidavit as to his knowledge of the sale of the four properties on Lesbos. The applicants said that they tendered the affidavit otherwise than as evidence of its truth although no order was sought under s 136 of the Evidence Act 1995 (Cth) restricting the use to which the evidence might be put. The first respondent submitted that the affidavit was not relevant to the issues for determination in the proceedings. That submission appeared to be made on the assumption that the proceedings were wholly misconceived because the applicants lacked standing. However, for reasons later given, the applicants’ lack of standing is an answer to some of their claims for relief but not to the entirety of the relief sought in the statement of claim. On this basis it is apparent that the evidence of Mr Perry is relevant even though the weight that can be given to it is limited in light of the fact that the affidavit was tendered as an exhibit only.3. BACKGROUND1.1 Administration of the bankruptcy and the applicants’ respective statements of affairs and liabilities On 13 October 2009, the then Federal Magistrates Court made sequestration orders against the applicants and appointed Mr Prentice as the trustee of each of the bankrupt estates. The date of the bankruptcies of Frosso and Stanley Coumanios was 17 December 2008 and, in the case of John Coumanios, 22 May 2009. Each of the applicants lodged their statements of affairs with the trustee on 15 March 2010 which included a summary of their respective asset and liability positions. Aside from a shop located in the Parthenon in Athens (the Athens shop) said to be owned jointly by Stanley and John Coumanios, none of the applicants disclosed any properties in Greece said to be owned by them or in which they had an interest as at the date of the bankruptcy. Mr Prentice explained that he did not take action to realise the value of the Athens shop, which had an estimated value of €200,000, because 2009 was “a period [of] somewhat financial disarray in Europe” with “properties in Europe quite difficult - particularly in Greece - to sell” and the property was “somewhat in disarray”. He did not consider that there was equity in the short term in realising that property. Consequently, while it was Mr Prentice’s system to archive files as he had done with respect to the Coumanios files, this was not because he did not propose to take any further action. Rather there were too many files to keep them all at hand. He explained that “[w]hat happens in bankruptcy quite regularly is that you don’t necessarily sell things early on in the bankruptcy. I’ve got assets that sometimes go back 12, 15 years that I realised.” Consequently, from time to time archived files are reviewed. This bankruptcy was one where there was knowledge of a property (the Athens shop) when the files were archived but the problem was how and when it could be sold.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Leaving aside claims no longer pressed, by their statement of claim the applicants seek orders that the sum of $23,324.64, being the sum realised from the sale of four properties on the island of Lesbos in Greece, is the property of the applicants. They also seek a permanent stay of proceedings against Mr Giunti in Australia and Greece in order to prevent him from realising other properties located in Greece pursuant to orders made by a Greek court for the enforcement of a judgment obtained by Mr Giunti in the District Court of New South Wales against the applicants (the District Court judgment). That judgment pre-dated the bankruptcy and was accepted as a provable debt against the applicants in the bankruptcies. The properties in Greece (including those realised) have been the subject of consent orders made earlier in these proceedings declaring that, as at the date of the applicants’ respective bankruptcies, the applicants’ interest in the properties vested in Mr Prentice as trustee of the bankrupt estates. For the reasons set out below, the applicants have not established any entitlement to relief and the application should be dismissed. Further, pursuant to r 2.43 of the Federal Court Rules 2011 (Cth), an order should be made that the Court pays to the trustee, all sales proceeds paid into Court by Mr Giunti pursuant to the orders made on 17 June 2015, as sought by the trustee in his interlocutory application filed on 16 February 2016. The applicants have no entitlement to those monies and the first respondent properly concedes that they are vested in the trustee. In addition, by a so-called interlocutory application dated 14 March 2016, the first respondent relevantly seeks leave nunc pro tunc pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth) (the Act) for Mr Giunti to enforce the District Court judgment. At the hearing, the first respondent indicated that he may not press for that order depending upon the outcome otherwise of the proceedings. In the circumstances, the first respondent is to advise the Court as to his position following delivery of this judgment. 2. WITNESSES The applicants relied upon the following affidavits:(1)the affidavit of Mrs Frosso Coumanios sworn 18 December 2014;(2)the affidavit of Mr Stanley Charles Coumanios sworn 8 October 2015; and(3)the affidavit of Mr Peter Brian McKell sworn 8 October 2015; These affidavits were read subject to rulings on objections. None of the deponents were cross-examined. The trustee relied upon his affidavit sworn on 12 February 2016 which was read without objection, and exhibit MWP2 thereto (marked Exhibit R21). Mr Prentice was cross-examined by the applicants. Finally, the affidavit of Roger Perry, an accountant who represented Mr Giunti, was tendered as an exhibit by the applicant (exhibit A4) but was not read, and was received subject to relevance. I note that the affidavit had been filed by the first respondent in compliance with orders of the Court made on 17 June 2015 requiring him to file and serve an affidavit as to his knowledge of the sale of the four properties on Lesbos. The applicants said that they tendered the affidavit otherwise than as evidence of its truth although no order was sought under s 136 of the Evidence Act 1995 (Cth) restricting the use to which the evidence might be put. The first respondent submitted that the affidavit was not relevant to the issues for determination in the proceedings. That submission appeared to be made on the assumption that the proceedings were wholly misconceived because the applicants lacked standing. However, for reasons later given, the applicants’ lack of standing is an answer to some of their claims for relief but not to the entirety of the relief sought in the statement of claim. On this basis it is apparent that the evidence of Mr Perry is relevant even though the weight that can be given to it is limited in light of the fact that the affidavit was tendered as an exhibit only.3. BACKGROUND1.1 Administration of the bankruptcy and the applicants’ respective statements of affairs and liabilities

Ratio Decidendi

Legal Principle Established

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