Djordjevic v Mondino

Case [2023] FCA 882

FEDERAL COURT OF AUSTRALIA

Djordjevic v Mondino [2023] FCA 882  

File number: NSD 244 of 2023
Judgment of: RAPER J
Date of judgment: 1 August 2023
Catchwords:

BANKRUPTCY AND INSOLVENCY – application made by respondent for review of sequestration order by a judicial registrar – the applicant and respondent executed a deed purportedly resolving their dispute and agreeing amongst other matters, that the sequestration order be set aside

PRACTICE AND PROCEDURE – the respondent applied for the deed to be set aside – application dismissed  
Legislation: Bankruptcy Act 1966 (Cth) s 43
Cases cited:

Australia & New Zealand Banking Group v Karam [2005] NSWCA 344; 64 NSWLR 149

Coldunell Ltd v Gallon [1986] 2 WLR 466

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447

Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40

Johnson v Buttress (1936) 56 CLR 113

Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392

Quek v Beggs (1990) 5 BPR 11,761

Thorne v Kennedy [2017] HCA 49; 263 CLR 85

Watkins v Combes (1922) 30 CLR 180
Division: General Division
Registry: New South Wales
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Number of paragraphs: 63
Date of hearing: 26 July 2023
Solicitor for the Applicant:  Ms B Schweers of Mason Black + Mendelsons Lawyers
Counsel for the Respondent:  Mr M Mondino appeared in person

ORDERS

NSD 244 of 2023
BETWEEN:

STANCHE DJORDJEVIC

Applicant
AND:

MARIO MONDINO

Respondent

ORDER MADE BY:

RAPER J

DATE OF ORDER:

1 AUGUST 2023

THE COURT ORDERS THAT:

1.The respondent’s interlocutory application dated 19 June 2023, seeking that the deed be set aside, is dismissed.

2.The respondent is required to specifically perform his obligation under cl 3.2(b) of the Deed, executed by him on 5 June 2023, and sign and return to the applicant for filing with the Court the consent orders provided to him by the applicant on 16 June 2023 to the effect that:

(a)The sequestration order be set aside;

(b)Leave for the application for review of the Registrar’s decision to make a sequestration order to be dismissed; and

(c)No order as to costs;

within seven (7) days of the date of this order.

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


REASONS FOR JUDGMENT

RAPER J

  1. This matter concerns an application by the respondent (Mr Mondino) for review against an order that Mr Mondino’s estate be sequestered. After filing this application, Mr Mondino entered into a deed which resulted in him paying $20,000 (rather than the outstanding disputed debt of $44,374.11) and the applicant agreeing that the sequestration order be set aside with no order as to costs (Deed). Mr Mondino seeks to set aside that deed and persist with his application to review the sequestration order. For the reasons which follow, the application to set aside the Deed is dismissed and Mr Mondino is ordered to specifically…

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AGLC
Djordjevic v Mondino [2023] FCA 882
Case
[2023] FCA 882
Decision Date

CaseChat Overview and Summary

The case of Djordjevic v Mondino involved a dispute between the applicant, Ms Djordjevic, and the respondent, Mr Mondino. The matter originated when Ms Djordjevic served a bankruptcy notice on Mr Mondino in respect of several judgment debts. Following this, a creditor’s petition was filed, and a sequestration order was made against Mr Mondino. The primary legal issue before the court was whether the respondent could have the Deed of Settlement and Release set aside on the basis of unconscionability, duress, or misrepresentation. The court was also required to determine whether the mediator's conduct during the mediation process amounted to a vitiating factor warranting the setting aside of the Deed.

The court carefully examined Mr Mondino's claims of unconscionability, duress, and misrepresentation. It noted that Mr Mondino had not provided any grounds for his application nor written submissions in advance of the hearing. The court found that Mr Mondino's assertions of being unduly influenced by the Registrar and mediator were not substantiated by the evidence. It was highlighted that Mr Mondino had signed the Deed five days after receiving it and had ample time to review its terms. The court also dismissed Mr Mondino's claims regarding the mediator's alleged involvement in drafting the Deed, finding no evidence to support this assertion. The court concluded that Mr Mondino had not proven the setting aside of the Deed on any of the vitiating factors he had described.

In its judgment, the court dismissed Mr Mondino's application to set aside the Deed. It ordered that Mr Mondino specifically perform his obligation under the Deed by signing and returning the consent orders to the applicant for filing with the Court. These orders would set aside the sequestration order, dismiss the application for review, and make no order as to costs. The court's decision was based on the finding that Mr Mondino had not demonstrated any grounds warranting the setting aside of the Deed.

Orders

Orders of the court

1. The respondent’s interlocutory application dated 19 June 2023, seeking that the deed be set aside, is dismissed.

2. The respondent is required to specifically perform his obligation under cl 3.2(b) of the Deed, executed by him on 5 June 2023, and sign and return to the applicant for filing with the Court the consent orders provided to him by the applicant on 16 June 2023 to the effect that:

(a) The sequestration order be set aside;

(b) Leave for the application for review of the Registrar’s decision to make a sequestration order to be dismissed; and

(c) No order as to costs;

within seven (7) days of the date of this order.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Mr Mondino provided no grounds for this application nor written submissions in advance of the hearing.The evidence Both parties relied on affidavit evidence. The relevant portions are extracted as follows. Neither witness was required for cross-examination. By way of affidavit sworn on 4 July 2023, in support of his application, Mr Mondino deposed to the relevant events he said gave rise to why the Deed should be set aside:2.The Court had previously noted that Ms Djordjevic was required to provide information to the respondent in relation to the sale, if any, of the respondent’s vehicle which took place by sequestration back in 2018. Upon this request , [sic] made by the respondent under sec 4.03 of the Bankruptcy Rules 2016 the mediator stated:” lets [sic] set that aside for now because there is a sequestration order in place and we need to find a resolution”. The meeting was conducted in the conference room on Lev 17 of the Federal Court in Sydney. I believe i [sic] was unduly influenced by this statement.3.It was set aside by the Mediator and a Registrar cannot set aside an Order of a Judge.4.I was then asked by the mediator how much i [sic] could afford to pay as i [sic] still owed $55,000 it was stated.5.Upon making the first offer to pay the outstanding amount of the Bankruptcy Notice by instalments the Applicant’s solicitor rejected this offer and the Mediator and the Applicant’s solicitor both exited the room and engaged in conversation in a side room. I remained in the conference room. The mediator kept relaying messages between the parties from there on.6.I was intimidated when it was mentioned to me that the Applicant wanted to place a caveat on my home as guarantee to which i [sic] objected strenuously. I subsequently agreed to paying $20,000 upfront and the rest by way of instalments 7.The deed was drafted by the solicitor with the assistance of the mediator which happened to be the Register [sic] whom [sic] had previously made orders against me, adjourning the initial application to set aside the bankruptcy notice.8.I agreed to pay $20,000 and the remainder by way of instalments under duress with the fear of a caveat being placed on my property.9.I sent the $20,000 via electronic bank transfer to the trust account described in the Deed of settlement and release on the 6th June 2023.10.I signed and sent the deed on the the [sic] same day.11.Ms Brooke Schweers of Mason Black+Mendelsons Lawyers has deceived me as the $20,000 paid would relieve and release Mason Black and anyone else from any future claims made against them.12.None of the terms within the Deed were communicated to me. Nor am I able to understand them.13.The Deed is a gross misrepresentation of the contested liability as to previous legal costs of proceedings rather than the amount outstanding in the bankruptcy notice.14.It does not seek to achieve it’s [sic] objective, nor is it clear, nor precise nor unambiguous in it’s [sic] content as it only creates further dispute as to the legitimacy of Bankruptcy proceedings, brought against me by way of subrogation, from inter-state jurisdiction to which the Deed is legally inapplicable.15.It is self-indemnifying and therefore illegal and raises questions of a constitutional nature in regards to it’s [sic] prohibited use in another Jurisdiction.16.It is in the interest of Justice, that the Respondent seeks, that the Honourable Court make the following order :That the $20,000 payment be returned to the RespondentThe Deed be set-aside or not as the Court seeks fit.

Decision

Reasons for decision

On 19 December 2022, Mr Mondino was served a bankruptcy notice by the applicant’s lawyers in respect of several judgment debts totalling $113,030.92, with the total amount owing being $99,255.71. On 16 March 2023, the applicant filed a creditor’s petition in respect of the judgment debts. On 27 April 2023, a Registrar of this Court ordered that the estate of Mr Mondino be sequestrated pursuant to s 43 of the Bankruptcy Act 1966 (Cth). On 15 May 2023, Mr Mondino filed an interim application in which he sought that the sequestration order be reviewed (review application). This matter was allocated to my docket on 17 May 2023, and was first case managed by me on 26 May 2023. At that case management hearing, Mr Mondino confirmed that he had paid part of the amount owing, being $54,881.60, where the total sum claimed to be owed in the creditor’s petition was $99,255.71. Mr Mondino also claimed that he was solvent. Mr Mondino took issue with how the proceeds from the sale of his motor vehicle by the New South Wales Sheriff following proceedings in the Local Court were accounted for: Specifically, Mr Mondino submitted that the sale proceeds from the vehicle should have been “counter-claimed” against the judgments. On 26 May 2023, I made orders referring the matter to mediation before a Registrar of the Court. I also set down a timetable allowing the matter to be heard on 20 June 2023 should mediation fail. On 5 June 2023, Mr Mondino executed the Deed, following Court-ordered mediation and, on 6 June 2023, Mr Mondino paid a settlement sum of $20,000 to the applicant pursuant to the Deed. On 20 June 2023, Mr Mondino filed an interlocutory application dated 19 June 2023 in which he sought the following orders: 1. Set Aside Deed2. Applicant to reverse the $20,000 transaction(Emphasis in original.) Mr Mondino provided no grounds for this application nor written submissions in advance of the hearing.The evidence Both parties relied on affidavit evidence. The relevant portions are extracted as follows. Neither witness was required for cross-examination. By way of affidavit sworn on 4 July 2023, in support of his application, Mr Mondino deposed to the relevant events he said gave rise to why the Deed should be set aside:2.The Court had previously noted that Ms Djordjevic was required to provide information to the respondent in relation to the sale, if any, of the respondent’s vehicle which took place by sequestration back in 2018. Upon this request , [sic] made by the respondent under sec 4.03 of the Bankruptcy Rules 2016 the mediator stated:” lets [sic] set that aside for now because there is a sequestration order in place and we need to find a resolution”. The meeting was conducted in the conference room on Lev 17 of the Federal Court in Sydney. I believe i [sic] was unduly influenced by this statement.3.It was set aside by the Mediator and a Registrar cannot set aside an Order of a Judge.4.I was then asked by the mediator how much i [sic] could afford to pay as i [sic] still owed $55,000 it was stated.5.Upon making the first offer to pay the outstanding amount of the Bankruptcy Notice by instalments the Applicant’s solicitor rejected this offer and the Mediator and the Applicant’s solicitor both exited the room and engaged in conversation in a side room. I remained in the conference room. The mediator kept relaying messages between the parties from there on.6.I was intimidated when it was mentioned to me that the Applicant wanted to place a caveat on my home as guarantee to which i [sic] objected strenuously. I subsequently agreed to paying $20,000 upfront and the rest by way of instalments 7.The deed was drafted by the solicitor with the assistance of the mediator which happened to be the Register [sic] whom [sic] had previously made orders against me, adjourning the initial application to set aside the bankruptcy notice.8.I agreed to pay $20,000 and the remainder by way of instalments under duress with the fear of a caveat being placed on my property.9.I sent the $20,000 via electronic bank transfer to the trust account described in the Deed of settlement and release on the 6th June 2023.10.I signed and sent the deed on the the [sic] same day.11.Ms Brooke Schweers of Mason Black+Mendelsons Lawyers has deceived me as the $20,000 paid would relieve and release Mason Black and anyone else from any future claims made against them.12.None of the terms within the Deed were communicated to me. Nor am I able to understand them.13.The Deed is a gross misrepresentation of the contested liability as to previous legal costs of proceedings rather than the amount outstanding in the bankruptcy notice.14.It does not seek to achieve it’s [sic] objective, nor is it clear, nor precise nor unambiguous in it’s [sic] content as it only creates further dispute as to the legitimacy of Bankruptcy proceedings, brought against me by way of subrogation, from inter-state jurisdiction to which the Deed is legally inapplicable.15.It is self-indemnifying and therefore illegal and raises questions of a constitutional nature in regards to it’s [sic] prohibited use in another Jurisdiction.16.It is in the interest of Justice, that the Respondent seeks, that the Honourable Court make the following order :That the $20,000 payment be returned to the RespondentThe Deed be set-aside or not as the Court seeks fit.

Ratio Decidendi

Legal Principle Established

Unconscionable conduct arises where “a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage”: Amadio at 461 per Mason J. A special disadvantage does not exist in every case where there is some difference in bargaining power; instead, it must be a condition or circumstance “which seriously affects the ability of the innocent party to make a judgment as to his own best interests, and where the other party knows or ought to know of the existence of that condition or circumstance and its effect on the innocent party”: Amadio at 462. The High Court in Kakavas v Crown Melbourne Ltd [2013] HCA 25; 250 CLR 392 held unconscionable conduct concerns the prevention of “victimisation” not the consequences of foolishness (at [18]) or “proof of a predatory state of mind”, not mere “[h]eedlessness of, or indifference to, the best interests of the other party” (at [161]). In this regard, unconscionable conduct is focussed on the conduct of the party defending the application.Consideration I am not satisfied that Mr Mondino has proven the setting aside of the Deed on any of the vitiating factors described above. There was no clear demarcation in Mr Mondino’s submissions between the application of each possible vitiating factor and the impugned conduct. All circumstances giving rise to Mr Mondino signing the Deed are relevant to my determination. Relevantly, while the alleged conduct arose in the mediation, Mr Mondino did not in fact receive a copy of the Deed until after the mediation and did not execute it for five days after receipt. I will detail this aspect of the chronology further below. However, I will start with a consideration of the alleged conduct giving rise to his claims at the mediation on 31 May 2023. Mr Mondino asserts that, during the course of the mediation, he was “unduly influenced” by the Registrar. He relies on [2] of his 4 July 2023 affidavit, extracted at [12] above. He also submitted that the Registrar was involved in the preparation of the Deed, which he appeared to assert formed part of this claim. It can be accepted that Mr Mondino raised concerns with the Registrar about the applicant’s alleged failure to provide information about the sale of his car. In this respect, I note that there had been no order made by me requiring that the applicant provide such information. Rather, on 26 May 2023, I noted, in timetabling orders which included setting the matter down for hearing, the following:Before the mediation, the Applicant’s (Mr [sic] Djordjevic) legal representatives will write to the Respondent (Mr Mondino) to explain the basis upon which they say account has been taken of the sale of Mr Mondino’s car with respect to the outstanding debt relied upon in the Creditor’s Petition and provide any relevant documents from the Sheriff or otherwise which demonstrate the fact of the car’s sale and the proceeds received.