Diners Club Pty Ltd v Vitler - [2005] FMCA 1374

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DINERS CLUB PTY LTD v VITLER

[2005] FMCA 1374

BANKRUPTCY – Rule 16.05 of the Federal Magistrates Court Rules 2001 – setting aside Sequestration Order – Creditor concedes petition not properly served – whether order for Trustees costs should be made – whether annulment pursuant to s.153B should be granted.

Federal Magistrates Court Rules 2001, Rule 1.05(3)(b), 16.05(2)(a), 16.05(2)(c), 29.01(2)
Bankruptcy Act 1966, s.153B

Applicant:

DINERS CLUB PTY LTD

Respondent:

LAURA VITLER

File Number:

MLG 294 of 2005

Judgment of:

McInnis FM

Hearing date:

12 September 2005

Delivered at:

Melbourne

Delivered on:

12 September 2005

REPRESENTATION

Counsel for the Applicant:

Mr P. Fary

Solicitors for the Applicant:

Aitken Walker & Strachan

Solicitors for the Respondent:

Eggleston Mitchell Lawyers

ORDERS

The Notice of Motion filed 15 August 2005 be deemed to be an application and so much of the Rules be otherwise dispensed with that would prevent the application being heard and determined this day.
Pursuant to Rule 16.05(2)(a) of the Federal Magistrates Court Rules 2001, the Sequestration Order made by this Court against the Respondent in her absence on 26 April 2005 be set aside.
The Applicant’s Creditors petition dated 4 March 2005 be dismissed.
There be no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 294 of 2005

DINERS CLUB PTY LTD

Applicant

And

LAURA VITLER

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

This is an application by way of notice of motion by Laura Vitler seeking to set aside a sequestration order made on 26 April 2005 pursuant to Rule 16.05(2)(c) of the Federal Magistrates Court Rules 2001 (the Rules). The order sought to be relied upon should in fact be 16.05(2)(a) given that the Sequestration Order was one made in the absence of Ms Vitler.
The Notice of Motion which I deem to be an application for the purposes of this court seeks an order that the Sequestration Order be set aside and in the alternative has sought an order pursuant to s.153B of the Bankruptcy Act 1966 (the Act) that the Respondent's bankruptcy be annulled. When the matter came on for hearing before the Court, counsel for the respondent provided minutes of proposed consent orders which had been duly signed by the solicitors acting for and on behalf of the applicant creditor.
It is clear that the order of 26 April 2005 was made in the absence of the Respondent. It was made upon the usual material in support of a creditor's petition filed 23 March 2005. An affidavit of service was also filed along with other affidavit material in support of the application. There does not appear to be any significant delay in the matter being listed for hearing on 26 April 2005 and nor for the present purposes do I find that there has been any undue delay in the filing of this notice of motion given the circumstances set out in the supporting affidavit sworn by Laura Vitler on 8 August 2005.
In her affidavit, in brief terms, Ms Vitler notes that the Sequestration Order was made against her on 26 April 2005 but otherwise asserts that she was never served with the creditor's petition in this proceeding. She then refers to what she believes has occurred; namely that her sister had impersonated her when accepting the creditor's petition served upon Ms Vitler's sister at an address in the Australian Capital Territory.
It is interesting to note that the affidavit of service relied upon in relation to the petition sworn by Marilyn Joy Scheidung on 18 April 2005 in fact refers to the person allegedly being the respondent as stating in relation to the question, "Is your name Laura Vitler, the respondent in this matter?" the following, "Yes, my name is Laura Cunningham." As it happens the surname ‘Cunningham’ is the married surname of Ms Vitler's sister.
It is clear to me on a proper reading of the affidavit sworn by Ms Vitler that she has indeed provided sufficient evidence upon which this court can conclude that she did not appear when the orders were made on 26 April 2005 as a result of the matters referred to in her affidavit; namely that her sister impersonated her and received the creditor's petition on her behalf, though not stating to the process server that she was in fact the sister and not Ms Vitler, hence conveying to the process server that she was in indeed Ms Vitler when in fact that was not the case.
I am satisfied that in the exercise of the court's discretion under Rule 16.05(2)(a) of the Rules where there is an explanation given of this kind it is appropriate for the Court to make an order sought by consent.
During the course of submissions an issue arose as to whether or not the court does indeed have power to set aside a sequestration order in these circumstances. Whilst the setting aside of a sequestration order, rather than annulment or indeed review of a Registrar's decision, may occur in rare circumstances, I can see no reason why in this instance the court does not have indeed a power to set aside an order, including a sequestration order, pursuant to Rule 16.05 of the Rules.
It is clear in any event that this court in Schedule 3 of its Rules has adopted and applied Order 35 of the Federal Court Rules which makes provision for a similar procedure to be followed. It is equally clear that in this instance Rule 29.01(2) provides that Chapters 1 and 3 apply in the Rules, so far as they are relevant and not inconsistent with this chapter, to a proceeding to which the Bankruptcy Act applies.
Clearly chapter 4 of the rules entitled ‘Bankruptcy Proceedings’ is intended to apply to most bankruptcy proceedings, but Rule 29.01(2) provides - relevantly in the present case - an exception in relation to the application of Chapter 1. Rule 16.05 is part of Chapter 1. Further, as indicated, Schedule 3 of the rules in any event makes provision for this court to apply Order 35 of the Federal Court Rules. It does so by operation of Rule 1.05(3)(b) of the Rules which provides for the application of the Federal Court Rules as set out in Part 2 of Schedule 3, applying with necessary changes to general federal law proceedings.
For those reasons I am satisfied the court has jurisdiction to make an order of the kind sought pursuant to Rule 16.05(2)(a). For the reasons given I am satisfied it is appropriate to make orders in the form of minutes of proposed consent orders.
A separate and discrete issue has arisen as to the Trustee's rights and entitlements to seek costs. The matter was stood down to enable contact to be made with the trustee following the Court being made aware of correspondence dated 26 August 2005 from the Trustee to the solicitors for Ms Vitler. That correspondence indicates that the Trustee has incurred costs in the sum of $406.00. Reference is then made to the minimum statutory official trustee's fees payable of $4500.00 and a realisation charge being also payable, which presumably follow circumstances where an annulment order may be made.
From a practical point of view, given that there has been an assertion of a claim to costs, I thought it might be prudent to permit Counsel for Ms Vitler to arrange through his instructing solicitor to contact the Trustee to determine whether or not the Trustee wanted to participate further in these proceedings given that the letter to which I have referred indicated that the Trustee did not wish to participate further.
That suggestion was also made in the context of an undertaking which in the circumstances I thought from a practical point of view might be appropriate; namely that Ms Vitler through her Counsel provide an undertaking to pay to the trustee costs of $406.00. It would appear that the Trustee, upon being made aware of that proposal, has indicated that the proposal is not one where the Trustee wishes to be heard on and, as far as I can gather, is not one which in any event is the subject of agreement.
Although Counsel for Ms Vitler indicated that he had instructions if necessary to provide an undertaking of the kind referred to, he otherwise sought the orders by consent. In my view the suggested undertaking was no more than a practical means of resolving what otherwise might be further proceedings arising out of the unfortunate set of circumstances where through no fault of her own, Ms Vitler, as a result of the impersonation of her by her sister, has in fact been the subject of a Sequestration Order based upon a creditor's petition not served.
I infer from the material that in fact the bankruptcy notice which was also the subject of an affidavit of service in all probability was likewise not served personally on Ms Vitler. In those circumstances, as I have indicated I have no hesitation in making the order which in my view as a matter of law I am entitled to make in the exercise of my discretion under Rule 16.05 and do not require any undertaking to be given as a precondition to those orders by consent.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 12 September 2005