Dunell v Kerr

[2021] FCCA 1029

FEDERAL CIRCUIT COURT OF AUSTRALIA

Dunell v Kerr [2021] FCCA 1029

File number(s):

BRG 63 of 2021

Judgment of:

JUDGE EGAN

Date of judgment:

14 May 2021

Catchwords:

BANKRUPTCY – Application defective and embarrassing – application in part dismissed against all respondents – application otherwise dismissed against fourth - eighth respondents inclusive – directions as to future conduct of the proceeding.

Legislation:

Bankruptcy Act 1966 (Cth), ss 50, 153B, 183

Federal Circuit Court of Australia Act 1999 (Cth), s 17A

Federal Circuit Court Rules 2001 (Cth), rr 13.10, 14.03

Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), rr 2.01, 6.01, 7.01, 7.02, 7.03, 8.02  

Number of paragraphs:

22

Date of last submission/s:

11 May 2021

Date of hearing:

11 May 2021

Place:

Brisbane

Applicant:

The Applicant appeared in-person on his own behalf

Solicitor for the First, Sixth, Seventh and Eighth Respondents:

Mr Zeibell of Mills Oakley

Solicitor for the Second and Third Respondents:

Ms Whitman of Thomson Geer Solicitors

Counsel for the Fourth Respondent:

Mr Stumer

Solicitor for the Fourth Respondent:

Herbert Smith Freehills

Solicitor for the Fifth Respondent:

Ms Mrmos of Mozaik Lawyers

ORDERS

BRG 63 of 2021

BETWEEN:

WARREN JOHN DUNELL

Applicant

AND:

DAVID JOHN KERR

First Respondent

PHIL KAUNITZ

Second Respondent

AIMEE MUNDT (and others named in the Schedule)

Third Respondent

ORDER MADE BY:	JUDGE EGAN
DATE OF ORDER:	14 MAY 2021

IT IS ORDERED THAT:

1.Insofar as the Application filed on behalf of the Applicant on 18 February 2021 sought relief pursuant to the provisions of s. 183 of the Bankruptcy Act 1966 (Cth), the application is dismissed as against all Respondents.

2.Insofar as the Application filed on behalf of the Applicant on 18 February 2021 sought relief in the nature of an order for the annulment of his bankruptcy, such application be dismissed as against the Fourth, Fifth, Sixth, Seventh and Eighth Respondents.

3.The Applicant have leave to file and serve upon the First, Second and Third Respondents, by 4:00 pm 4 June 2021, an Amended Application, and any supporting affidavit, confined to the question as to whether or not his bankruptcy ought to be annulled.

4.The First Respondent, Second Respondent and Third Respondent file and serve any affidavits in response to the Applicant’s affidavit material by 4:00 pm on 18 June 2021.

5.The matter be listed for directions at 9:45 am on 8 July 2021 in the Federal Circuit Court of Australia sitting a Brisbane.

6.Each party have liberty to apply on the giving of two (2) days’ notice, each to the other.

REASONS FOR JUDGMENT

JUDGE EGAN:

1. On 17 October 2018, a sequestration order was made against the estate of the applicant, who remained as an undischarged bankrupt as at the date of the hearing of the application. [1]   

   [1]           Affidavit of Mr Goh filed on 30 March 2021 and Annexure DCG-1 thereto.

2. On 18 February 2021, the applicant filed an application which purported to be filed pursuant to “Rules 2.01; 6.01; 14.03”. As to those rules:

   (a)Rule 2.01 of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) (‘the Bankruptcy Rules’) related to the filing of an application “permitted by the Bankruptcy Act to be made to the Court” in Form B2. At least to the extent that the application was not made in a proceeding already commenced in the Court, the use of Form B2 for the purpose of making the application was appropriate.

   (b)Rule 6.01 of the Bankruptcy Rules was a rule which related to the examination of a debtor or examinable person under s. 50 of the Bankruptcy Act 1966 (Cth), and was therefore inapt for the purpose of the subject application.

   (c)There was no rule 14.03 of the Bankruptcy Rules. Rule 14.03 of the Federal Circuit Court Rules 2001 (Cth) related to the filing of an affidavit document and was also inapt for the purposes of the present application.

3. The application, under the heading “Details of claim”, sought the following relief:

   “Details of claim

   On the grounds stated in the statement of claim, accompanying affidavit or other document prescribed by the Rules, the Applicant claims:

   1.Annulment under Bankruptcy Act 1966 part VIII, 183 Release of Registered Trustee by Court Section (4) An order of release under this section:

   2.Annulment under Bankruptcy Act 1966 Part VIII, 183 Release of Registered Trustee by Court Section (5) An order of release under this section:”

4. Part of the application was, self-evidently, reliant upon the provisions of s. 183 of the Bankruptcy Act 1966 (Cth) (‘the Act’). Such section fell under Part VIII of the Act, under the heading “Release of registered trustee by the Court”, and provided as follows:

   “(1)A trustee may apply to the Court for an order of release from the trusteeship of an estate.

   (2) Where the Court is satisfied that the trustee:

   (a)  has realized all the property of the bankrupt or so much of it as can be realized without unduly protracting the trusteeship or has distributed a final dividend;

   (b)  has ceased to act by reason of the approval of a composition or scheme of arrangement under Division 6 of Part IV; or

   (c)  has resigned or has been removed from office;

   the Court may make the order sought.

   (3)  In hearing the application, the Court must also consider any objection to the order sought that is made by the Inspector‑General, the Official Receiver, a creditor or any other interested person.

   (4)  An order of release under this section:

   (a)  discharges the trustee from all liability in respect of any act done or default made by him or her in the administration of the estate of the bankrupt; and

   (b)  if the trustee has not already resigned or been removed from office, operates to remove him or her from office.

   (5)  An order of release under this section may be revoked by the Court on proof that it was obtained by fraud or by suppression or concealment of a material fact.

   (6)  Where a trustee has died, the person administering the estate of the trustee may apply to the Court for an order releasing the trustee’s estate from any claims arising out of the trustee’s administration of an estate of which he or she was trustee and, upon such an application, the Court may make such order as it thinks proper in the circumstances.

   (7)  This section does not apply in relation to the Official Trustee.”

5. Rule 8.02 of the Bankruptcy Rules sets out the applicable procedures to be adopted where an application for the release of a trustee had been filed. To the extent that there was a mandatory requirement that the application was to be served upon the Official Receiver, the provisions of r. 8.02(4)(a) were not complied with by the applicant. Rule 8.02 of the Bankruptcy Rules provided as follows:

   “(1)      This rule applies to the following applications:

   (a)  an application for the acceptance under section 180 of the Bankruptcy Act of a trustee’s resignation from the office of trustee of an estate;

   (b)  an application under subsection 183(1) of the Bankruptcy Act for the release of a trustee from the trusteeship of an estate.

   (2)  The application must be accompanied by an affidavit stating the grounds in support of the application.

   (3)  For an application referred to in paragraph (1)(b), the following must be attached to the affidavit:

   (a)  a statement giving details of the realisation of the bankrupt’s property and the distribution of the estate by the trustee;

   (b)  a copy of the books referred to in section 70‑10 of Schedule 2 to the Bankruptcy Act in relation to the estate.

   (4)       The application and supporting affidavit must be served on:

   (a)       the Official Receiver; and

   (b)       the bankrupt; and

   (c)       anyone else (including a creditor) as ordered by the Court.

   (5)  If the Court makes the order sought, and the order is not entered in accordance with rule 16.08 of the Federal Circuit Court Rules 2001 at the time the order is made, the trustee must, within 1 day after the order is made, request entry of the order in accordance with that rule.

   (6)  Within 2 days after the order is entered, the trustee must give a copy of the entered order to the Official Receiver.”

6. At the time that the application was filed, the applicant contemporaneously filed a document entitled “Notice to creditors of annulment application”. Rules 7.01 – 7.03 of the Rules, under the heading “Annulment or Review of Bankruptcy”, were relevantly as follows:

   “7.01 Application of Division 7.1

   This Division applies to the following applications:

   (a)  an application under section 153B of the Bankruptcy Act for the annulment of a bankruptcy;

   (b)  an application under section 252B of the Bankruptcy Act for the annulment of the administration of the estate of a deceased person.

   7.02  Requirements for application

   (1)       An application must set out the grounds on which the annulment is sought.

   (2)  The application must be served on the trustee at least 7 days before the date fixed for the hearing of the application.

   7.03  Notice to creditors

   (1)  The applicant must give notice of the application to each person known to the applicant to be a creditor of the bankrupt or a creditor of the estate of the deceased person.

   (2)       The notice must be in accordance with Form B11.

   (3)  The applicant must serve the notice on each creditor at least 7 days before the date fixed for the hearing of the application.”

7. In support of his application, the applicant emailed to Judge’s Chambers eight (8) sets of submissions directed to each of the respondents. Those submissions were not filed but will be marked Exhibits 1 – 8 respectively so as to correspond with the respective naming of respondents in the application. 

   Summary Determination of Application

8. The Court finds that the application as filed is embarrassing in two (2) respects, namely:

   (a)The application for annulment intended to be sought by the applicant was purportedly made under Part VIII of the Act. Section 153B of the Act, which is the section which deals with the making by the Court of an order for the annulment of a bankruptcy, not only falls under Part VII of the Act, but is not referred to in the application.

   (b)The application for release of the trustee purportedly made by the applicant pursuant to the provisions of s. 183 of the Act was misconceived. That section allows a trustee to apply for release. It does not allow an undischarged bankrupt to bring any such application.

9. Section 17A of the Federal Circuit Court of Australia Act 1999 (Cth) (‘the FCC Act’) relevantly provided as follows:

   “(1)  The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:

   (a) the first party is prosecuting the proceeding or that part of the proceeding; and

   (b)  the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding

   (2)  The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:

   (a)  the first party is defending the proceeding or that part of the proceeding; and

   (b)  the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

   (3)  For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

   (a)       hopeless; or

   (b)       bound to fail;

   for it to have no reasonable prospect of success.

   (4) This section does not limit any powers that the Federal Circuit Court of Australia has apart from this section.”

10. The Court is satisfied that the applicant has no reasonable prospect of successfully prosecuting that part of the applicant’s claim which relates to the relief sought under s. 183 of the Act. That section simply does not enable the applicant to bring an application. The claim ought to be dismissed as against all respondents pursuant to the provisions of s. 17A(2) of the FCC Act.

11. As to the application for annulment, the application as presently framed has no prospect of success. It purported to be an application filed under Part VIII of the Act, but there is no power for a Court to make any such order under Part VIII. In such circumstances, the Court finds that the claim, as constituted at the time of the hearing before the Court, was hopeless and bound to fail. Nonetheless, the Court recognises that an order for summary dismissal ought not to be lightly made. Such an order ought to only be made in the clearest of cases. As is later referred to in these reasons, the applicant shall be granted leave to file and serve an amended application, and otherwise comply with the Rules, should he wish to proceed with any application for annulment of his bankruptcy. Whether or not he intends to do so is of course a matter for him.

12. In the present matter, though, each of the respondents has been made a party to the proceedings in their different capacities. A necessary examination of each such respective joinder must be undertaken.

    First Respondent

13. The first respondent was appointed as the trustee in bankruptcy of the applicant’s estate. He has remained in such position. To the extent that the applicant seeks to have the bankruptcy annulled, the trustee is an appropriate party able to be joined in any such proceeding. Allegations of fraud have also been made by the applicant against the first respondent. The first respondent will remain a party to the annulment proceeding.

    Second and Third Respondents

14. The second respondent was a partner at the legal firm Kemp Strang. Such firm represented Australia and New Zealand Banking Group Limited (‘ANZ’) during the course of the bankruptcy proceedings in the Federal Circuit Court of Australia. The third respondent was a solicitor employed by Kemp Strang. Each of the second and third respondents later became employees of the firm Thomson Geer, which firm replaced Kemp Strang as the firm of solicitors representing ANZ in the bankruptcy proceedings.

15. Neither the second respondent nor the third respondent are creditors in the applicant’s bankrupt estate, but allegations of fraud have been made against the third respondent. To the extent that such untested allegations have been made, it is possible that if they are proven, some liability might attach to each of the second and third respondents. In such circumstances, the second and third respondents will remain as parties to the annulment proceeding. Their application for removal as parties filed on 29 March 2021 is dismissed.

    Fourth Respondent

16. The fourth respondent was, and remains, the Chief Executive Officer (‘CEO’) of ANZ. There is no evidence that he was at any time a creditor of the applicant. Other than broadly asserting that the fourth respondent was responsible for all ANZ employees and the daily running of the ANZ, the applicant has not established by any admissible evidence that he has any reasonable cause of action against the fourth respondent either personally, or in his capacity as CEO of ANZ. The fourth respondent’s application in a case filed on 30 March 2021 for summary dismissal of the claim against him is granted.

    Fifth Respondent

17. The fifth respondent was a senior associate in the employ of Mason Black Lawyers. That firm represented Northern SEQ Distributor-Retailer Authority trading as Unitywater. Unitywater was a creditor of the applicant’s bankrupt estate. Other than acting for Unitywater, the fifth respondent had no dealings with the applicant and had ‘no current action’ against the applicant. The applicant did not provide any evidentiary basis for his joinder of the fifth respondent as a party to the proceeding in his affidavit in support of the application filed on 29 March 2021. There is no material before the Court which satisfies it that the applicant has a reasonable cause of action against the fifth respondent. The application in a case filed on behalf of the fifth respondent on 31 March 2021 seeking dismissal of the proceedings against her is granted.

    Sixth Respondent

18. The sixth respondent acted as a lawyer for the first respondent in Queensland District Court proceedings relating to the appointment of statutory trustees for the sale of land in respect of which the applicant claimed an interest. The applicant had sought to appear in the District Court on the hearing of the application for the appointment of statutory trustees, but was refused leave prior to the Court making the orders requested. The sixth respondent has relevantly had no other involvement with the applicant. The applicant did not provide any evidentiary basis for his joinder of the sixth respondent as a party to the proceeding in his affidavit in support of the application filed on 29 March 2021. There is no material before the Court which satisfies it that the applicant has a reasonable cause of action against the sixth respondent. The application in a case filed on behalf of the sixth respondent on 23 March 2021 seeking summary dismissal of the application against him is granted.

    Seventh and Eighth Respondents

19. The seventh and eighth respondents were the statutory trustees for sale of property in which the applicant claimed to have had an interest. The applicant did not provide any evidentiary basis for his joinder of the seventh and eighth respondents as parties to the proceeding in his affidavit in support of the application filed on 29 March 2021. It has not been alleged by the applicant that either the seventh or the eighth respondents were engaged in any fraudulent conduct which, if proven, could justify an order being made for the annulment of the bankruptcy.

20. In such circumstances, the Court finds that the application filed on behalf of the applicant as against the seventh and eighth respondents raised no reasonable cause of action, and was hopeless and bound to fail. The proceeding is dismissed accordingly pursuant to the provisions of s. 17A(2) of the FCC Act and pursuant to r. 13.10 of the Federal Circuit Court Rules 2001 (Cth).

21. In the event that the applicant seeks to amend his application to make it compliant, and if the applicant otherwise complies with all other legislative requirements, the first, second and third respondents shall have leave, if so advised, to make any interlocutory application going to the competency or efficacy of the amended application.

22. The Court will hear the parties as to costs.    

I certify that the preceding twenty-one (22) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Egan.

Associate:

Dated:       14 May 2021

SCHEDULE OF PARTIES

BRG 63 of 2021
Respondents
Fourth Respondent:	SHAYNE ELLIOT
Fifth Respondent:	JESSICA DODDS
Sixth Respondent:	STEPHEN DICKENS
Seventh Respondent:	MATTHEW JOINER
Eighth Respondent:	DARRYL KIRK