Doulman v ACT Electronic Solutions Pty Limited and Anor (No.2)

The case of *Doulman v ACT Electronic Solutions Pty Limited and Anor (No.2)* concerned applications before the Federal Circuit Court of Australia. The primary dispute involved Mr Llewellyn Mark Doulman and Mr Nigel John Gabbedy, a legal practitioner. Mr Doulman sought to be indemnified by Mr Gabbedy for liabilities he owed to the former trustee in bankruptcy, Mr Michael Edward Slaven. These liabilities arose from Mr Doulman's bankruptcy, which was later annulled. Mr Doulman's claim was based on the fact that his bankruptcy had been initiated by a creditor's petition presented by Mr Gabbedy without the authority of the named creditor.

The court was required to determine several legal issues. Firstly, it had to construe an earlier costs order made by the Court when annulling Mr Doulman's bankruptcy, specifically whether this order restricted Mr Gabbedy's indemnity to the legal costs incurred by the trustee in the annulment proceedings, or if it extended to all liabilities Mr Doulman had to the trustee under section 154 of the *Bankruptcy Act 1966* (Cth). Secondly, the court considered whether it possessed jurisdiction to entertain Mr Doulman's claim for indemnity against Mr Gabbedy, particularly whether such a claim constituted a proceeding arising under the *Bankruptcy Act* or fell within the Court's implied incidental powers to regulate practitioners appearing before it. Thirdly, the court examined whether Mr Doulman was estopped from bringing his claim due to prior litigation or if the claim constituted an abuse of process. Finally, the court addressed the substantive question of whether Mr Gabbedy was liable to compensate or indemnify Mr Doulman for losses suffered as a consequence of being made bankrupt on an unauthorised petition.

Judge Manousaridis reasoned that the earlier costs order was restricted to indemnifying Mr Doulman only in relation to his liability for the trustee's legal costs incurred in the annulment proceedings, and did not extend to all liabilities under section 154 of the *Bankruptcy Act*. However, the Court found it had jurisdiction to entertain Mr Doulman's indemnity claim against Mr Gabbedy, as it was a proceeding arising out of the circumstances of the bankruptcy and fell within the Court's power to regulate practitioners. The claim was not precluded by estoppel and was not an abuse of process, as it was not a re-litigation of determined matters and was based on a valid legal contention. The Court concluded that Mr Gabbedy was liable to compensate or indemnify Mr Doulman for losses suffered due to the unauthorised creditor's petition.

The Court ordered that Mr Doulman pay the Trustee $4,144.28 by 17 July 2015. Mr Gabbedy was ordered to pay the Trustee such amounts as the Trustee was entitled to recover from Mr Doulman under section 154 of the *Bankruptcy Act*, excluding the Trustee's legal costs and disbursements from the annulment proceedings. Upon these payments, the Trustee was to take steps to remove any caveats lodged against Mr Doulman's property. Mr Gabbedy was ordered to pay the Trustee's costs of the applications, while Mr Gabbedy and Mr Doulman were to bear their own costs otherwise.