De Andrade v Da Vesi Construction Group Pty Ltd
[2023] ACTSC 161
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | De Andrade v Da Vesi Construction Group Pty Ltd |
Citation: | [2023] ACTSC 161 |
Hearing Date: | 21 June 2023 |
DecisionDate: | 29 June 2023 |
Before: | McWilliam J |
Decision: | (1) The application for leave to appeal out of time, filed 15 May 2023, is dismissed for lack of competency. (2) The applicant is to pay the respondent’s costs. |
Catchwords: | APPEAL – APPEAL FROM MAGISTRATES COURT – Application for leave to appeal out of time – where applicant is bankrupt – applicant lacks standing to bring application – application dismissed |
Legislation Cited: | Bankruptcy Act 1966 (Cth) ss 5, 58, 60, 153 Court Procedures Rules 2006 (ACT) |
Cases Cited: | Cummings v Claremont Petroleum NL(1996) 185 CLR 124 Da Vesi Construction Group Pty Ltd v De Andrade [2021] FCA 1033 Want v Moss (1889) 10 NSWR (L) 274 |
Parties: | Rubie De Andrade ( Applicant) Da Vesi Construction Group Pty Ltd ( Respondent) |
Representation: | Counsel J O’Keefe ( Applicant) A Chakrabarty ( Respondent) |
| Solicitors Tu’ulakitau McGuire ( Applicant) Adero Law ( Respondent) | |
File Number: | SCA 27 of 2023 |
Decision under appeal: | Court/Tribunal: Magistrates Court Before: Magistrate Fryar Date of Decision: 24 January 2019 Case Title: Da Vesi Construction Group Pty Ltd (ACN 122 278 735) v Rubie De Andrade Citation: [2019] ACTMC 1 |
McWILLIAM J:
The applicant, Ms De Andrade, is an individual who is currently an undischarged bankrupt. The bankruptcy occurred as a consequence of an order made in the Federal Court on 13 August 2021. This was the applicant’s second bankruptcy, the earlier bankruptcy having occurred as a result of a sequestration order made in October 2018.
Prior to the first entry into bankruptcy, in November and December 2017, the parties had litigated in the Magistrates Court over a breach of contract dispute. Judgment was delivered in the Magistrates Court on 24 January 2019, after the first sequestration order was made.
The respondent in this proceeding, Da Vesi Construction Group Pty Ltd, was successful, with judgment entered in its favour: Da Vesi Construction Group Pty Ltd (ACN 122 278 735) v Rubie De Andrade [2019] ACTMC 1 (primary judgment).
Because the applicant had been made bankrupt in the meantime, she believed she was unable to appeal the decision without the Trustee in Bankruptcy’s permission. She now takes a different view, and by application filed 15 May 2023, has sought the leave of the Court to appeal the primary judgment.
The respondent opposed the grant of leave on the basis of standing, and otherwise on the basis that the application for leave was made more than four years outside the time limit provided for under the Court Procedures Rules 2006 (ACT), the explanation for the delay was unsatisfactory, the proposed appeal had little to no merit and it would suffer prejudice, due to the judgment debt now having been lodged as a proof of debt with the applicant’s Trustee in Bankruptcy.
Does the applicant have standing to bring the application for leave?
The first question for determination must be whether the applicant has standing to bring the application for leave to appeal. That is because only a person who has standing to raise the question can bring it for determination before the Court – a principle that has been described as “fundamental” to the operation of the legal system: Samootin v Shea [2010] NSWCA 371 (Samootin) at [63] per Campbell JA (Beazley and Hodgson JJA agreeing).
Campbell JA went on to say at [64]-[65]:
64.Any proceedings that are brought by a person who lacks standing are incompetent. Apart from situations where a statute confers standing on a particular type of person, court proceedings that seek to enforce rights in private law, can only be brought by a person who has a real interest in having the question determined: Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, at 448 per Lord Dunedin; Forster v Jododex Aust Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at [6] per Gibbs J; Green v. Daniels [1977] HCA 18; (1977) 51 ALJR 463, at 469 per Stephen J re declarations. That principle is the implicit basis of Bridgewater v Leahy [1998] HCA 66; 194 CLR 457 at [27], [80], and CGU Insurance Limited v OneTel Limited (In Liquidation) [2010] HCA 26 at [29]–[39]. Case law concerning particular types of causes of action can provide more specific guidance as to what counts as a “real interest” for the purpose of that cause of action. …
65.The Court has power acting on its own motion to dismiss proceedings brought by a person who does not have standing to do so, as it is an abuse of process for a person who lacks the legal right to do so to commence or continue court proceedings. Because the Court should not permit an abuse of its process to occur, the Court should exercise its power to dismiss proceedings once it is satisfied that proceedings are incompetent.
The question of standing here requires a consideration of what right the applicant is seeking to enforce, and in whom the right is the vested, by reference to the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).
In the proceedings in the Magistrates Court, the applicant was defending a claim by the respondent for moneys said to be owed by her under contract or in quantum meruit.
Under s 5 of the Bankruptcy Act, the applicant’s money falls within the definition of property:
"property" means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.
Section 58 of the Bankruptcy Act provides for the vesting of the applicant’s property upon the applicant becoming bankrupt. The money she had at the time became vested in the Official Trustee (or the subsequent registered trustee): s 58(1).
In Cummings v Claremont Petroleum NL(1996) 185 CLR 124 (Cummings) at 134 it was held that the right of a person who became bankrupt to appeal against a judgment holding the person liable to pay a money sum was not “property of the bankrupt”. However (emphasis added):
If the postulated appeal relates to property that became vested in the trustee on the bankruptcy, or if the postulated appealrelates to a claim by the bankrupt for money or property that would be vested on recovery in the trustee, the right to appeal is vested in the trustee...
The above statement was applied in Samootin at [84]-[85], where an application for leave to appeal was under consideration. It was stated that if the leave to appeal application were granted, extending the time to appeal, the right to appeal itself was that of the Trustee, not the bankrupt applicant. Campbell JA later returned (at [88]) to Cummings at 136, where Brennan CJ, Gaudron and McHugh JJ held:
... a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy.
Campbell J then explained why this was so at [90]:
The reasoning, at 136–138, is that the making of the sequestration order converts the debt into a right of proof, the only assets out of which it can be satisfied are assets that have vested in the trustee, and for that reason the bankrupt has no interest in the proceedings. Further, as their Honours said at 138:
A bankrupt’s contingent interest in a surplus does not give him an interest which would allow him to sue to enforce proprietary rights, and, that being so, it cannot give him an interest to appealto minimise liabilities.
Similarly, in the application for leave to appeal here, the applicant is seeking to appeal a judgment where she was ordered to pay money. If successful, she would achieve a reduction in her liabilities. However, that liability can only be satisfied out of money that has vested in the Trustee in Bankruptcy. For that reason, the applicant had no interest in the proceeding when the application for leave was filed in May 2023.
The consequence is that the applicant has no standing to bring the application for leave to appeal, because any rights that she is seeking to enforce through the proceedings are not rights that are vested in her.
Even if the applicant were to be discharged from her current bankrupt status, the property that previously vested in the Trustee for division amongst her creditors (of which the respondent is now one) remains vested in the trustee: see Samootin at [97]-[100] and the authorities there-cited discussing the application of s 153(1) of the Bankruptcy Act.
Thus, even if the applicant were released from bankruptcy, she would still lack the capacity to bring proceedings to vindicate rights or challenge liability of a kind that were provable in her bankrupt estate. The evidence before the Court was that the judgment debt arising from the primary judgment became one of those provable liabilities.
For completeness, the parties devoted some submissions to reliance upon the application of s 60(2) of the Bankruptcy Act. That provision only operates in relation to “an action commenced by a person who subsequently becomes a bankrupt”. The proceedings in the Magistrates Court were not an action commenced by the applicant. She was the defendant in the court below.
In any event, the institution of an appeal constitutes an “action” for the purposes of s 60(5): Cummings at 130 and 142 applying Want v Moss (1889) 10 NSWR (L) 274. However, the present application for leave to appeal is not an action commenced by the applicant “who subsequently” became bankrupt. In the period between 24 January 2019 (when the primary judgment was delivered), and 13 August 2021 (when the second sequestration order was made), there was no “action” commenced by the applicant. The application for leave was only sought to be brought after bankruptcy. For those reasons, s 60(2) does not apply.
The result is that the application is incompetent and must be dismissed. That means it is unnecessary to go further to consider the arguments dealing with the substance of the application (length of delay, explanation for delay, underlying merit and prejudice).
Costs
The application having been unsuccessful, there is no reason to depart from the usual order that costs follow the event. The respondent sought an order on a basis more favourable than the ordinary basis, given what it claimed was the “perverse nature” of the application. In written submissions, the respondent pointed out that Thawley J in Da Vesi Construction Group Pty Ltd v De Andrade [2021] FCA 1033 (at [43]), the proceedings giving rise to the sequestration order, had explained to the applicant that she did not have standing to appeal. That is so, and indeed Thawley J referred to Cummings, but the proceeding before his Honour primarily concerned a different question, and it was not necessary for the reasons for the conclusion as to a lack of standing to be provided in any detail. When the application was filed, the respondent wrote to the applicant and informed her that she would require leave of the Trustee in Bankruptcy to bring such an application. Again however, the contents of the letter do not set out the argument. The solicitor who appeared for the applicant provided some authority to explain why he took the view that the applicant may have standing. In all the circumstances, while the applicant has not been successful, I am not persuaded that her conduct in bringing the application was so unreasonable as to warrant indemnity costs.
Orders
The Orders of the Court are as follows:
(1) The application for leave to appeal out of time, filed 15 May 2023, is dismissed for lack of competency.
(2) The applicant is to pay the respondent’s costs.
| I certify that the preceding twenty-three [23] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice McWilliam. Associate: Date: 29 June 2023 |
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