Diab v McDonald

[2007] FCA 387

FEDERAL COURT OF AUSTRALIA

Diab v McDonald [2007] FCA 387

MOHAMMED DIAB v GEOFFREY DAVID MCDONALD AND COMMONWEALTH BANK OF AUSTRALIA
NSD 2051 OF 2006

RARES J
15 MARCH 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2051 OF 2006

BETWEEN:

MOHAMMED DIAB
Applicant

AND:

GEOFFREY DAVID MCDONALD
First Respondent

COMMONWEALTH BANK OF AUSTRALIA
Second Respondent

JUDGE:	RARES J
DATE OF ORDER:	15 MARCH 2007
WHERE MADE:	SYDNEY

THE COURT:

1.Varies the time in which under r 7.03(3) of the Federal Court (Bankruptcy) Rules 2005 (Cth) the applicant must serve notice of the application on each creditor to not later than 16 March 2007.

2.Stands the hearing of the application for annulment and the hearing of the second respondent’s notice of motion to dismiss the proceedings over to 26 March 2007 at 10.15am.

3.Orders the first respondent to pay the costs of any other party thrown away by reason of the adjournment today, and such costs are not to be taken from the bankrupt’s estates.

4.Directs the applicant to file and serve:

(a)any affidavit upon which he proposes to rely in reply to the affidavit of Geoffrey David McDonald affirmed 13 March 2007;

(b)evidence of service upon his creditors in accordance with r 7.03 on or before 22 March 2007.

5.Directs the first respondent to file and serve any further affidavit upon which he proposes to rely on or before 19 March 2007.

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	NSD 2051 OF 2006

BETWEEN:

MOHAMMED DIAB
Applicant

AND:

GEOFFREY DAVID MCDONALD
First Respondent

COMMONWEALTH BANK OF AUSTRALIA
Second Respondent

JUDGE:	RARES J
DATE:	15 MARCH 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

1. On 23 February 2007, I directed that any further evidence upon which the respondents wished to rely be filed and served on or before 7 March 2007.  Rule 7.04.4(b) of the Bankruptcy Rules,requires that a report be filed by the trustee in the form of an affidavit at least five days before the hearing date fixed for the application.  Yesterday afternoon, the trustee, Mr McDonald, served on the applicant and filed in the Court an extensive affidavit, purporting to comply with the obligation under r 7.04.  There is no adequate explanation as to why that affidavit was filed late;  indeed, it was sworn on the previous day, 13 March 2007.  The trustee asserted that the reason it was served late is because he was waiting for the applicant to provide further documents under notices to produce.  I do not regard that as an adequate explanation for his default in complying with the order to file an affidavit on r 7.04.4(b).

2. The trustee also asserted that the applicant must have failed in the present proceedings in any event, because of his failure to comply with his obligation to give notice to creditors under r 7.03.  That is a matter which the trustee failed to draw to the applicant’s attention.  It may have been a matter that would have been fatal to the applicant’s claim in any event.

3. It may well have been a fatal matter to the applicant’s claim that he had not served notice on his creditors; although, for my part, I fail to see why the need to serve the notice might not have been properly drawn to his attention given he is a litigant in person.  I do not know if I can attribute blame in any way to the trustee or second respondent for not doing so.  It may well have been a good answer to the applicant’s claim that would have required it to be dismissed because he failed to do so.  I note that the Court may have a discretion to dispense with the rules for giving notice in any event.  However, those matters do not require the exercise of my discretion on this occasion.

4. The trustee is a person in a position analogous to that of a trustee in bankruptcy appointed by the Court.  I am of opinion that he is required to behave in the way in which James LJ set out in Re Condon;  Ex parte James, LR 9 Ch App 609 at 614, namely as an officer of the Court. The trustee is professionally represented in these proceedings, and has no excuse for not complying with orders of the Court. He could have had the matter re-listed in order that the Court could amend orders that are otherwise operative but instead did not.

5. Moreover, the trustee ought to have been aware of his obligations under the Rules and ought to have been aware of the timing obligations which the Rules impose.  I do not see any reason in these circumstances why the Court should be extending consideration to a trustee who failed to carry out his duties, or to obey directions of the Court as to the filing of evidence which has caused the need to adjourn these proceedings.  The trustee’s failure to comply with both the directions that I made for the filing and service of affidavits and the requirements of the Bankruptcy Rules has not been explained in a satisfactory way. Costs of the second respondent, thrown away by the adjournment of the hearing today, which are likely to be of some substance, ought be borne by the trustee and not by the trust estate. 

6. For these reasons, I am of opinion that it is appropriate to order the trustee to pay the costs thrown away by today’s adjournment in any event, and that they not be paid from the trust estate.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate:

Dated:        23 March 2007

Applicant:	In person
Counsel for the First Respondent:	AD Crossland
Solicitor for the First Respondent:	M Shortall of Clinch Neville Long
Counsel for the Second Respondent:	EC Muston
Solicitor for the Second Respondent:	L Anderson of JK O’Sullivan
Date of Hearing:	15 March 2007
Date of Judgment:	15 March 2007