Dimitrovski v Boland

Case [2023] FCAFC 86

FEDERAL COURT OF AUSTRALIA

Dimitrovski v Boland [2023] FCAFC 86

Appeal from: Decision of the Supreme Court of New South Wales delivered by Lindsay J on 22 October 2021
File number: NSD 319 of 2022
Judgment of: MARKOVIC, DOWNES AND KENNETT JJ
Date of judgment: 31 May 2023
Catchwords: BANKRUPTCY AND INSOLVENCY – where applicant a discharged bankrupt – where applicant sought leave to appeal and extension of time to appeal from decision of Supreme Court of New South Wales – where applicant included claim for damages for personal injuries – where primary judge held personal injury claims were not severable from the property claims – whether s 160(2)(g) of the Bankruptcy Act 1966 (Cth) was enlivened such that the claims had not vested in the trustee of the applicant’s bankrupt estate – where proposed grounds of appeal have no merit – application dismissed
Legislation:

Australian Securities and Investments Commission Act 2001 (Cth) ss 12CB, 12DA

Bankruptcy Act 1966 (Cth) ss 5, 60(4), 116(1), 116(2)(a), 116(2)(g)

Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) ss 18, 21

Corporations Act2001 (Cth) ss 601AH(2), 1041E, 1041G, 1041H, 1041I, 1324(10), 1325

Federal Court of Australia Act 1976 (Cth) ss 24(1D)(b), 27, 31A

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s 7(5)

Federal Court Rules 2011 (Cth) rr 1.34, 4.01(2), 35.13, 36.57

Uniform Civil Procedure Rules 2005 (NSW) rr 13.4, 14.28, 51.6, 51.9
Cases cited:

Bryant v Commonwealth Bank of Australia (1997) 75 FCR 545; [1997] FCA 582

Decor Corporation Pty Ltd & Anor v Dart Industries Inc. (1991) 33 FCR 397; [1991] FCA 844

Faulkner v Bluett (1981) 52 FLR 115; [1981] FCA 3

Fokas v Mansfield as Trustee of the Bankrupt Estate of Maria Fokas (No 2) [2020] FCA 30

Hurdis v Jones (Trustee), in the matter of Hurdis [2022] FCA 980

Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited (2008) 167 FCR 372; [2008] FCAFC 60

Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401; [2009] FCAFC 117

Macatangay v State of New South Wales (No 2) [2009] NSWCA 272

McGinn v Cranbrook School [2016] NSWCA 226

Metsikas v Quirk [2010] NSWSC 756

Moss v Eaglestone (2011) 83 NSWLR 476; [2011] NSWCA 404

O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71

Singh v Minister for Immigration and Border Protection [2017] FCAFC 195

Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28

Wilkinson v Dowton [1897] 2 QB 57; [1897] EWHC 1 (QB)
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 76
Date of hearing: 16 May 2023
Counsel for the Applicant: Mr P King
Solicitor for the Applicant: Russell Kennedy Lawyers
Counsel for the First, Second and Third Respondents: The First, Second and Third Respondents appeared in person.
Counsel for the Fourth Respondent: The Fourth Respondent did not appear.

ORDERS

NSD 319 of…

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AGLC
Dimitrovski v Boland [2023] FCAFC 86
Case
[2023] FCAFC 86
Decision Date

CaseChat Overview and Summary

The applicants in Dimitrovski v Boland sought leave to appeal and an extension of time to appeal from a decision of the Supreme Court of New South Wales. The applicants, who were discharged bankrupts, had brought claims for damages for personal injuries in addition to property claims. The primary judge held that the personal injury claims were not severable from the property claims and that the claims had vested in the trustee of the applicants’ bankrupt estates. The applicants sought leave to appeal and an extension of time to appeal from the decision of the primary judge.

The court was required to decide whether the proposed grounds of appeal had merit and whether the applicants were entitled to an extension of time to appeal. The court found that the proposed grounds of appeal had no merit and that the applicants were not entitled to an extension of time to appeal. The applicants had not demonstrated any special circumstances that would justify an extension of time.

The court found that the primary judge’s decision was correct and that the applicants had not demonstrated any error on the part of the primary judge. The applicants had not shown that the primary judge had failed to take into account any relevant consideration or had made an error of law. The court found that the applicants’ claims for damages for personal injuries were inextricably interwoven with their financial matters and that the claims had vested in the trustee of their bankrupt estates.

The application for leave to appeal and an extension of time to appeal is dismissed. The applicants are ordered to pay the respondents’ costs of the application.

Orders

Orders of the court

1. The application for an extension of time and leave to appeal dated 2 May 2022 is dismissed.

2. The interlocutory applications dated 13 April 2023 and 2 May 2023 are dismissed.

3. The applicant pay the respondents’ costs of the application referred to in Order 1.

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

Background

Background to the litigation

For the reasons that follow, we would dismiss the Leave Application and decline to make the orders sought in the Dimitrovski Further Evidence Application and the Boland Further Evidence Application.BACKGROUND The Leave Application arises in the following circumstances. In 2004, Mr Dimitrovski invested $500,000 in Life Order Products Pty Ltd, a company associated with Mr and Mrs Boland. On 9 December 2013, Mr Dimitrovski was made a bankrupt and, on 21 December 2016, he was discharged from bankruptcy. On 4 June 2021, Mr Dimitrovski and Ms Vasil commenced the Supreme Court Proceeding by filing a statement of claim. Mr and Mrs Boland, Mr Reid and Avid Business were named as the first, second, third and fourth defendants respectively in that proceeding. In their statement of claim, Mr Dimitrovski and Ms Vasil, among other things, sought compensation under Pt 5.2.3 and Pt 5.2.4 of the Australian Consumer Law (ACL) being Sch 2 to the Competition and Consumer Act 2010 (Cth), orders for compensation under ss 1041I, 1324(10) and 1325 of the Corporations Act2001 (Cth), damages, declarations that each of the defendants contravened ss 18 and 21 of the ACL, ss 1041E, 1041G and 1041H of the Corporations Act and ss 12CB and 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), injunctions and, to the extent necessary, an order pursuant to s 601AH(2) of the Corporations Act for reinstatement of the registration of Life Order. On 30 July 2021, Mr and Mrs Boland and Avid Business filed a notice of motion in the Supreme Court Proceeding seeking orders that the Proceeding be summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) or, in the alternative, that the statement of claim be struck out in whole or in part pursuant to r 14.28 of the UCPR (Summary Dismissal Application). The Summary Dismissal Application came before Lindsay J in the Supreme Court for hearing on 22 October 2021. At that time Mr Reid made an oral application, which his Honour granted, seeking leave to press for the same orders as sought in the Summary Dismissal Application (Mr Reid’s Application). The Summary Dismissal Application and Mr Reid’s Application were successful and on 22 October 2021 the following orders (Supreme Court Orders) were made:1)ORDER that the third defendant be granted leave to move the Court for the relief claimed in the notice of motion filed on 30 July 2021 by the first, second and fourth defendants.2)ORDER that that motion be made returnable before the Court instanter and be heard together with the notice of motion filed on 30 July 2021.3)ORDER that any requirement for the third defendant to file and serve a notice of motion additional to the notice of motion filed on 30 July 2021 be dispensed with.4)ORDER that the proceedings be dismissed insofar as the first plaintiff makes claims for relief.5)ORDER that the statement of claim filed on 4 June 2021 be otherwise struck out, reserving to the second plaintiff leave to re-plead any claim for relief upon which she relies.6)ORDER that the second plaintiff file and serve, no later than 10 December 2021, any amended statement of claim which she proposes to file.7)ORDER that the proceedings be listed before the Registrar on 10 February 2022 for directions.8)ORDER that the plaintiffs pay the defendants' costs of the motions for summary relief determined by the Court on 22 October 2021, assessed on the ordinary basis.9)ORDER that these orders be entered forthwith.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In any event, even if Mr Dimitrovski could succeed in having the judgment set aside on this ground, the result would be that the matter would be remitted to require the primary judge to provide adequate reasons. Contrary to Mr Dimitrovski’s submission, success on this ground would not lead to an order for a rehearing of the applications for summary dismissal.CONCLUSION It follows that the Leave Application should be dismissed. The Dimitrovski Further Evidence Application and the Boland Further Evidence Application should also be dismissed. While Mr and Mrs Boland were not legally represented, they may have incurred costs in connection with the proceeding and Mr Reid was legally represented in the proceeding until 27 April 2023, the date of his notice of termination of his lawyer. Accordingly, as he has been unsuccessful, Mr Dimitrovski should pay Mr and Mrs Boland’s and Mr Reid’s costs of the Leave Application. Otherwise, the parties should each bear their own costs of the Further Evidence Applications that will be dismissed. We will make orders accordingly.

Ratio Decidendi

Legal Principle Established

In their statement of claim, Mr Dimitrovski and Ms Vasil, among other things, sought compensation under Pt 5.2.3 and Pt 5.2.4 of the Australian Consumer Law (ACL) being Sch 2 to the Competition and Consumer Act 2010 (Cth), orders for compensation under ss 1041I, 1324(10) and 1325 of the Corporations Act2001 (Cth), damages, declarations that each of the defendants contravened ss 18 and 21 of the ACL, ss 1041E, 1041G and 1041H of the Corporations Act and ss 12CB and 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), injunctions and, to the extent necessary, an order pursuant to s 601AH(2) of the Corporations Act for reinstatement of the registration of Life Order. On 30 July 2021, Mr and Mrs Boland and Avid Business filed a notice of motion in the Supreme Court Proceeding seeking orders that the Proceeding be summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) or, in the alternative, that the statement of claim be struck out in whole or in part pursuant to r 14.28 of the UCPR (Summary Dismissal Application). The Summary Dismissal Application came before Lindsay J in the Supreme Court for hearing on 22 October 2021. At that time Mr Reid made an oral application, which his Honour granted, seeking leave to press for the same orders as sought in the Summary Dismissal Application (Mr Reid’s Application). The Summary Dismissal Application and Mr Reid’s Application were successful and on 22 October 2021 the following orders (Supreme Court Orders) were made:1)ORDER that the third defendant be granted leave to move the Court for the relief claimed in the notice of motion filed on 30 July 2021 by the first, second and fourth defendants.2)ORDER that that motion be made returnable before the Court instanter and be heard together with the notice of motion filed on 30 July 2021.3)ORDER that any requirement for the third defendant to file and serve a notice of motion additional to the notice of motion filed on 30 July 2021 be dispensed with.4)ORDER that the proceedings be dismissed insofar as the first plaintiff makes claims for relief.5)ORDER that the statement of claim filed on 4 June 2021 be otherwise struck out, reserving to the second plaintiff leave to re-plead any claim for relief upon which she relies.6)ORDER that the second plaintiff file and serve, no later than 10 December 2021, any amended statement of claim which she proposes to file.7)ORDER that the proceedings be listed before the Registrar on 10 February 2022 for directions.8)ORDER that the plaintiffs pay the defendants' costs of the motions for summary relief determined by the Court on 22 October 2021, assessed on the ordinary basis.9)ORDER that these orders be entered forthwith. While no reasons were published by Lindsay J, the transcript of the hearing records (at T31–T32) the following reasons given by his Honour for making the orders:Briefly, I'll state my reasons. Before the Court, are proceedings commenced by the filing of a statement of claim on 4 June 2021, in relation to causes of action, which the defendants contend, accrued no later than 11 June 2009. The causes of action pleaded in the statement of claim cover statutory and general law claims. Speaking broadly, the statutory claims relate to allegations of misleading and deceptive conduct, or unconscionable conduct, and the general law claim relates to a claim for damage for tortious conspiracy.Before the Court is a notice of motion filed on 30 July 2021 by the first, second and fourth defendants, seeking orders in the alternative, under Uniform Civil Procedure Rules 13.4 and 14.28. During the course of the hearing, the third defendant, which had previously foreshadowed support for the motion, sought and obtained leave to move the Court in terms similar to those of the notice of motion of the first, second and fourth defendants.The grounds upon which summary relief is sought by the defendants, might be reduced to three in number. First of all, as regards the first plaintiff, the fact is that he was made bankrupt on 9 December 2013, although he was discharged by operation of law from the bankruptcy on 21 December 2016. Secondly, the defendants take the point that the proceedings were commenced well after what is commonly a limitation period of six years, a matter which can be, in the circumstances, dealt with in the broad, given the orders have been made, or are being made.The first plaintiff was made bankrupt after the date, or dates, upon which any cause of action in him accrued, and in those circumstances, any cause of action he had vested in his trustee in bankruptcy. He makes a claim in respect of alleged personal injury, perhaps the idea being to bring himself within s 116(2)(g)(i) of the Bankruptcy Act. However, insofar as a claim for personal injury relief is made by the first defendant, it is inextricably interwoven with the financial matters, and accordingly, if there might be otherwise a claim for damages in respect of personal injury, that claim also vests in the trustee in bankruptcy. The fact that the first plaintiff was discharged from bankruptcy, does not alter that assessment, because the action, if there was an action, vested in the trustee in bankruptcy.In relation to the proceedings brought by the first plaintiff, the bankruptcy point, in my opinion, is sufficient to make a determination under r 13.4 of the Uniform Civil Procedure Rules. There is no reasonable cause of action disclosed. The point is not so clear in relation to limitation period defences that are advanced by the defendants. I am mindful of the warning given by the High Court in Wardley Australia Ltd v Western Australia [1992] 175 [CLR] 514 at 533-534. Some of the causes of action upon which the plaintiffs rely, might be the subject of a limitation barrier, but at least in relation to the second plaintiff, it's premature I think to form that view.Having determined that the proceedings brought by the first plaintiff should be dismissed, one turns one’s attention to the statement of claim, insofar as it pleads a claim for relief on the part of the second plaintiff. The statement of claim, as is conceded by counsel for the plaintiffs, is perhaps in need of review, in any event, but there is no clarity, for example, in para 7 of the statement of claim as to what claims for damages are made by whom. It’s not necessary to dwell too much on this, because if the second plaintiff seeks to proceed, it’ll be necessary for her to re-class the statement of claim generally.For those reasons, I have indicated that I'm making orders dismissing the first plaintiff's proceedings, striking out the statement of claim otherwise, but allowing the second plaintiff an opportunity to file an amended statement of claim. …