Dobrinski v Shepard (Trustee)

Case [2019] FCA 843

FEDERAL COURT OF AUSTRALIA

Dobrinski v Shepard (Trustee); In the matter of Slade [2019] FCA 843

File number: NSD 883 of 2018
Judge: FLICK J
Date of judgment: 6 June 2019
Catchwords:

BANKRUPTCY – duties of trustee in bankruptcy – alleged breach of duty

PRACTICE AND PROCEDURE – application for appointment of litigation representative
Legislation:

Federal Court Rules2011 (Cth) rr 9.61, 9.63

NSW Trustee and Guardian Act 2009 s 41
Cases cited:

Dobrinski v Slade [2010] NSWDC 297

Dobrinski v Goldman (unreported, Parker J, Supreme Court of New South Wales, 7 August 2017)

L v Human Rights and Equal Opportunity Commission [2006] FCAFC 114

Slade v Shepard [2013] FCCA 1237
Date of hearing: 29 November 2018, 18 December 2018 and 28 February 2019
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 50
Counsel for the Applicant: Mr T Hall
Solicitor for the Applicant: Hall Partners
Counsel for the Respondent: Mr M A Karam
Solicitor for the Respondent: Colin Biggers & Paisley Pty Ltd

ORDERS

NSD 883 of 2018

IN THE MATTER OF ROSLYN ELAINE SLADE
BETWEEN:

IRENE DOBRINSKI

Applicant
AND:

ADAM SHEPARD IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF ROSLYN ELAINE SLADE

Respondent

JUDGE:

FLICK J

DATE OF ORDER:

6 JUNE 2019

THE COURT ORDERS THAT:

1.The parties are to bring in Short Minutes of Orders to give effect to these reasons within fourteen days.

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


REASONS FOR JUDGMENT

FLICK J:

  1. The Applicant in the present proceeding (Ms Irene Dobrinski) claims she is a creditor in the bankrupt estate of her daughter, Ms Roslyn Slade.  Ms Dobrinski is also the mother of Mr Barry Goldman.

  2. The Respondent (Mr Adam Shepherd) is the trustee of the bankrupt estate.  

  3. The Applicant claims, in very summary form, that the trustee has breached his duties as a trustee.  The Originating Application, as filed on 24 May 2018, seeks orders including orders (without alteration) that the trustee:

    Ÿ“account to the Application for such losses as have been occasioned to her by reason of the assignment of her claim as creditor in the Estate to Macquarie National”;

    and

    Ÿ“repatriate the Estate as to the whole of the value of the Homebush Property…”.

    Ms Dobrinski also claims damages, including aggravated and exemplary damages.

  4. The facts which give rise to the dispute essentially emerge out of a sadly fractured family and a trustee in bankruptcy who became embroiled in the family disharmony. 

  5. Now before the Court is a Further Amended Interlocutory Application (the “Application”) seeking an order pursuant to r 9.63 of the Federal Court Rules2011 (Cth) (the “Federal Court Rules”) that Ms Sarah Winter be appointed as the “litigation representative” of Ms Dobrinski.  An initial difficulty with the Application is that the very basis upon which the application is made, namely…

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AGLC
Dobrinski v Shepard (Trustee) [2019] FCA 843
Case
[2019] FCA 843
Decision Date

CaseChat Overview and Summary

Dobrinski v Shepard (Trustee) involved an allegation of a breach of duty by a trustee in bankruptcy, concerning the administration of a bankrupt estate. The Federal Court was required to determine whether Ms Winter should be appointed as a litigation representative for Ms Dobrinski in this matter.

The court had to decide whether Ms Winter had made an informed decision to act as a litigation representative for Ms Dobrinski. This was necessary due to the complex background involving an alleged misuse of a power of attorney, a Deed of Assignment, and multiple proceedings in other courts. Despite reservations about the merits of the claims, Senior Counsel advised that the proceeding had reasonable prospects of success.

The court concluded that the application to appoint Ms Winter as the litigation representative should be granted, provided a new form of Consent was signed and filed. The proceeding was stood over to allow for further directions and to address any interlocutory applications. The court also noted that the respondent had been put to unnecessary expense and that submissions on costs would be entertained.

The court ordered that the parties were to bring in Short Minutes of Orders within fourteen days to give effect to these reasons.

Orders

Orders of the court

1. The parties are to bring in Short Minutes of Orders to give effect to these reasons within fourteen days.

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

Background

Background to the litigation

The irregularity in the institution of the proceeding, together with the background facts out of which the dispute arises, only dictate the need for the Court to approach the current Application with an added caution and to be assured that there is appointed a person who has properly reached a state of satisfaction as to the prudence of conducting the present proceeding.The facts out of which the dispute arises & reasons for concern The facts out of which the dispute and the litigation arise assume present relevance when attention is directed to the question as to whether Ms Winter has made an informed decision when consenting to act as a litigation representative. Those facts and issues are such as to invite questions as to whether Ms Winter has made a truly informed decision. Although it is unnecessary for present purposes to descend into the facts in any great detail, and it would be imprudent to do so, the facts would seem to start with an allegation made by Ms Dobrinski that her son, Mr Barry Goldman, “spirited her away from” her daughter (Ms Slade) and improperly used a power of attorney to commence proceedings against Ms Slade. Judgment was obtained in this proceeding in 2010: Dobrinski v Slade [2010] NSWDC 297. Ms Slade was unable to pay the debt and she voluntarily placed her estate into bankruptcy. Ms Dobrinski claims that she had “never intended or wished that the power of attorney be used to bring court proceedings against her daughter, or to obtain a judgment…”. She alleges that “the power of attorney was being used by Barry Goldman in circumstances that amounted to a fraud under [the] power”. Ms Dobrinski alleges that the trustee “was aware that Barry Goldman was acting fraudulently…”. It is also said that the trustee administered the bankrupt estate in a manner which benefited the interests of Mr Goldman in circumstances where the trustee (inter alia) “was aware there was reason to inquire as to Barry Goldman’s use of the power of attorney and the whole circumstances of the bankruptcy”. With respect to the proceeding commenced in this Court in May 2018, there are at least three reasons for reservation as to the merits of the claims now sought to be advanced. However each of those reservations may ultimately be resolved is a matter which must await future consideration. But, for present purposes, the three immediately self-evident reasons for reservation arise out of:·a Deed of Assignment whereby Ms Dobrinski has assigned all of her interest in the bankrupt estate of Ms Slade to Macquarie National Group Pty Ltd (“Macquarie National”);·the institution and termination of proceedings in the Supreme Court of New South Wales; and ·the institution and resolution of proceedings in the Federal Circuit Court of Australia. As to the first of these reasons, on 19 November 2013 Ms Dobrinski executed a Deed of Assignment of Debt. The parties to that Deed were herself (as assignor) and Macquarie National (as assignee) and Mr Goldman. Also executed on that date was an Irrevocable Authority and Direction to Pay whereby Ms Dobrinski directed the trustee of the bankrupt estate of Ms Slade to pay “all dividends otherwise payable to Irene Dobrinski out of the bankruptcy administration of Roslyn Slade” to Macquarie National.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The Consent to an appointment as a litigation representative as tendered during the hearing on 29 November 2018, however, predates the advice of Senior Counsel and has not been filed. Should Ms Winter still be willing to consent to the appointment, a new form of Consent should be executed by her and filed. CONCLUSIONS Although reservation is expressed as to whether the pursuit of the present proceeding is in the best interests of Ms Dobrinski, Senior Counsel has advised that it “does have reasonable prospects of success”. It is concluded that the application to appoint Ms Winter as the litigation representative of Ms Dobrinski in the present proceeding should be granted, provided a new form of Consent is signed and filed. Whatever prospects of success the case may have may thereby be pursued by Ms Winter as Ms Dobrinski’s representative. Compliance with r 9.61 of the Federal Court Rules should be dispensed with. The non-appointment of a litigation representative is as – as candidly accepted by the Applicant’s solicitor – his “fault”. The proceeding should be stood over to 26 June 2019 at 9.30am with a view to giving directions to ready the case for hearing or to address any such interlocutory applications as may be filed by the Respondent. Although submissions will be entertained as to the appropriate order to be made as to costs, it is presently considered that the Respondent has been put to at least some unnecessary expense in respect to the hearing of the Further Amended Interlocutory Application. THE ORDER OF THE COURT IS:The parties are to bring in Short Minutes of Orders to give effect to these reasons within fourteen days.

Ratio Decidendi

Legal Principle Established

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