Damjanovic v Spehar

[1998] FCA 1040

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7726  of  1998

BETWEEN:	MOJMIR DAMJANOVIC Applicant
AND:	IVAN SPEHAR Respondent

JUDGE:	EMMETT J
DATE:	4 AUGUST 1998
PLACE:	SYDNEY

THE COURT GRANTS:

Leave to the Applicant to file an amended application in accordance with Form 154 of the Rules.

THE COURT ORDERS THAT:

1. The application be dismissed in so far as it seeks:

   (a)      annulment of the bankruptcy;
   (b)      leave to proceed with District Court proceedings 387 of 1998;
   (c)       any injunction.

1. The Applicant pay the official trustee's costs of today.

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		NG 7726  of  1998
BETWEEN:	MOJMIR DAMJANOVIC Applicant
AND:	IVAN SPEHAR Respondent
JUDGE:	EMMETT J
DATE:	4 AUGUST 1998
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR:  A sequestration order was made on 9 September 1996, in respect of the Estate of Ivan Spehar (“the Bankrupt”).  The petitioning creditor was P.D. Mulligan Pty Limited in respect of a sum of $134,907.  A number of proofs of debt have been lodged with the Official Trustee including one on behalf of Mojmir Damjanovic (“the Applicant”).

I have before me an application for annulment of that bankruptcy.  The application for annulment also seeks further orders as follows:

1. That the Court make an order for examination and investigation of the Bankrupt's property, financial and business affairs.

2. That the Court grant an injunction restraining the Bankrupt from leaving Australia.

3. That the Court grant the Applicant leave to proceed with District Court statement of liquidated claim filed against the Bankrupt on 8 April 1998.

The application was apparently prompted as a result of a misunderstanding within the Official Trustee's office when the Applicant was informed that there was no record of the bankruptcy.  The Applicant was concerned, it seems, that the Bankrupt may have used the bankruptcy legislation as a means of avoiding his just debts.  The Applicant commenced proceedings in the District Court for recovery of the debt which is the subject of the proof of debt which has been lodged with the Official Receiver.  The Applicant was informed that he could not pursue the proceedings in the District Court without the leave of the Court, hence this application.

In the course of argument it was accepted on behalf of the Applicant that the application for annulment was brought as a result of a misunderstanding. The Applicant was under the impression that by having the bankruptcy annulled it may be possible to pursue assets of the Bankrupt to a greater extent than under the bankruptcy. That, of course, is not the case. The bankruptcy legislation confers powers on the Official Trustee to pursue assets which should be available for creditors. Power is also granted for transactions to be set aside in the circumstances contemplated by sections 120, 121 and 122 of the Bankruptcy Act 1966 (Cth) (“the Act”).

Accordingly, the Applicant accepted that the annulment should not be pursued.  It appears that the Applicant was warned of the consequences of pursuing the annulment application.  That may be relevant to the question of costs.

During a brief adjournment, there was some discussion between the representative of the official receiver and the Applicant, as a result of which there may be some exchange of information which may be to the benefit of both parties.  The Applicant is concerned that the Bankrupt had established a web of companies and that there has been an assignment or transfer of assets from those companies to new companies with the consequence that the creditors of the Bankrupt and the original companies have been deprived of the opportunity of recovering their debts.

I know nothing of those matters other than what has been effectively asserted from the bar table, although I have been informed that the companies in question are in liquidation and that the liquidators have not been able to recover assets that would enable any substantial dividend to be paid to creditors. At present there are no assets in the Bankrupt's estate which are likely to give rise to any dividend. The official receiver has no funds with which to conduct any public examination under section 81 of the Act.

One further possible difficulty concerns the existence of a purported assignment by the Applicant to Uralla Holdings Pty Limited of the debt which was the subject of the proof of debt.  The Applicant asserts that his signature on that document was forged or that it is otherwise not binding on him.  That is a matter which I cannot, of course, investigate at this stage.  It may, however, be a matter which will have to be investigated by the official receiver.

In the circumstances, I propose to dismiss the application insofar as it seeks annulment of the bankruptcy.   I have seen no reason why leave should be granted to proceed with the District Court proceedings.  The debt is the same debt in respect of which a proof has been lodged.  If there is any issue about the projection of the proof of debt lodged by Mr Damjanovic then that can be investigated by way of review of the decision of the official trustee on that issue.

There is no evidence before me that the Bankrupt is threatening to leave the country and there is no reason at this stage to intervene in the exercise by the official trustee of his discretion in relation to the control of the passport of the Bankrupt and his possible departure from the country. 

That leaves the application for an order for examination.  The application before me is not in the prescribed form.  I propose to give the Applicant leave to file an amended application in accordance with Form 154, such application to be made returnable in the ordinary course before a registrar in chambers.

The official receiver has attended Court as required by Order 77 Rule 44 and has prepared a report in accordance with that rule.  It is unfortunate that the Applicant, who appears in person and I believe appears genuinely and in good faith, has incurred expense unnecessarily.  However, be that as it may, the application should not have been brought in the form it was and, accordingly, I consider that it is appropriate that the Applicant pay the costs of the official trustee of attendance today.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:             4 August 1998

Solicitor for the Respondent:	Sally Nash & Co
Date of Hearing:	4 August 1998
Date of Judgment:	4 August 1998