Ehrenfeld v Australian Securities Ltd

[2025] WASCA 12

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT  :   THE COURT OF APPEAL (WA)

CITATION:   EHRENFELD -v- AUSTRALIAN SECURITIES LTD [2025] WASCA 12

CORAM:   VAUGHAN JA

HEARD:   ON THE PAPERS

DELIVERED          :   15 JANUARY 2025

PUBLISHED           :   15 JANUARY 2025

FILE NO/S:   CACV 51 of 2024

BETWEEN:   DANIEL EHRENFELD

Appellant

AND

AUSTRALIAN SECURITIES LTD

Respondent

ON APPEAL FROM:

Jurisdiction              :   DISTRICT COURT OF WESTERN AUSTRALIA

Coram:   BARONE DCJ

Citation: AUSTRALIAN SECURITIES LTD -v- EHRENFELD [2023] WADC 121

File Number            :   CIV 1960 of 2018

Catchwords:

Practice and procedure - Bankruptcy of appellant after appeal commenced - Operation of s 60(2) of Bankruptcy Act 1966 (Cth) - Whether trustee‑in‑bankruptcy elected to discontinue appeal - Turns on own facts

Legislation:

Bankruptcy Act 1966 (Cth), s 60
Supreme Court (Court of Appeal) Rules 2005 (WA), r 7(1)(b), r 19, r 59

Result:

Appeal dismissed pursuant to s 60(2) of Bankruptcy Act 1966 (Cth)

Category:    B

Representation:

Counsel:

Appellant	:	In person
Respondent	:	No appearance

Solicitors:

Appellant	:	In person
Respondent	:	Lavan

Case(s) referred to in decision(s):

Australian Securities Ltd v Ehrenfeld [2023] WADC 121

Australian Securities Ltd v Ehrenfeld [2023] WADC 121 (S)

Christovao v Tan and Tan Lawyers Pty Ltd [No 2] [2017] WASCA 171

Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124

Fletcher v Westpac [2012] WASCA 154

Lee v Lawfirst Pty Ltd [2023] WASCA 59

Lee v The State of Western Australia [2023] WASCA 165

Mullins on behalf of Settlers House Pty Ltd (in liq) v Directline Finance Pty Ltd [2020] WASCA 166

VAUGHAN JA:

1. This appeal is from a judgment entered against the appellant in the District Court of Western Australia.

2. The dispute the subject of the primary proceedings concerned a loan agreement between a borrower company, of which the appellant was a director, and the respondent lender, Australian Securities Ltd.  In part the loan was secured by a guarantee provided by the appellant.  The borrower company failed to repay the loan.  When other security was insufficient to discharge the amount owing, the respondent brought a claim for the outstanding loan amount against the appellant.

3. After trial in the District Court, the primary judge (Barone DCJ) was satisfied that the respondent had made out its claim under the guarantee:  Australian Securities Ltd v Ehrenfeld.[1]  Final orders were made on 13 August 2024 to the effect that, among other things, judgment be entered against the appellant in the sum of $303,983.20 plus interest at the rate of 10.88% per annum from 18 March 2021 to the date of judgment on 17 October 2023:  Australian Securities Ltd v Ehrenfeld.[2]

   [1] Australian Securities Ltd v Ehrenfeld [2023] WADC 121.

   [2] Australian Securities Ltd v Ehrenfeld [2023] WADC 121 (S) [53].

4. The appellant filed an appeal notice on 30 August 2024.  He did so as a self‑represented litigant.

5. The appellant was required to file his appellant's case on or before 4 October 2024. He failed to do so. The Court of Appeal registrar issued a Registrar's Notice to Attend dated 24 October 2024 for the appellant to show cause why the appeal should not be dismissed pursuant to r 43(2)(g)(ii) of the Supreme Court (Court of Appeal) Rules 2005 (WA) for failure to file and serve an appellant's case. The Registrar's Notice to Attend was returnable on 13 December 2024 at 11.30 am.

6. On 12 December 2024 the solicitors for the respondent purported to file a consent notice dated 11 December 2024 consenting to orders that:

   1.The appeal be dismissed.

   2.There be no order as to costs.

7. The consent order was signed by the respondent's solicitors, as the respondent's legal practitioner, and a Matthew Vines (who was described as 'Trustee-in-Bankruptcy') on behalf of the appellant.  The consent order was not accepted for filing given that Mr Vines was not a legal practitioner acting for the appellant.  When it became apparent that the consent notice dated 11 December 2024 had not been accepted for filing the solicitors for the respondent sent an email to the court.  That email, sent at 8.45 am on 13 December 2024, stated:

   We refer to Supreme Court of Appeal proceedings CACV 51 of 2024 and the hearing listed for 11:30 am today before the Hon Justice Vaughan.

   We act for the respondent.  We have copied the appellant's representatives to this email, being the appellant's trustee in bankruptcy.

   We received the attached consent notice from the appellant's trustee in bankruptcy, signed by the appellant himself, which we signed on behalf of the respondent and filed in the proceedings a short time ago.

   The consent notice seeks orders that dismiss the appeal with no order as to costs.

   In light of the orders sought, we would be grateful if you would confirm whether his Honour is minded to proceed with or vacate today's hearing.  (original emphasis)

8. As foreshadowed in the email, the consent notice dated 13 December 2024 consented to orders being made that the appeal be dismissed and there be no order as to costs.  The consent notice was signed by the appellant, personally, and the solicitors for the respondent.

9. The court informed the parties that it would be necessary to attend the hearing scheduled for 13 December 2024.  There were two reasons for the necessity for an attendance at the hearing.  First, to the extent that the appellant - as a self-represented litigant - was able to consent and was in fact consenting to judgment, it was necessary that he attend before the court and give his consent in person.  Second, there was reason to believe that the appellant was a bankrupt.  If so, the position of the trustee-in-bankruptcy had to be considered.  There was, however, no affidavit or other evidentiary material before the court dealing with the appellant's status or whether Mr Vines was in fact the appellant's trustee-in-bankruptcy.

10. At the hearing on 13 December 2024, counsel for the respondent informed the court that:

    1.The appellant had become a bankrupt on 1 November 2024.

    2.The respondent's solicitors were informed of the appellant's bankruptcy on 1 November 2024.

11. It is disappointing that, having been informed of the appellant's bankruptcy on 1 November 2024, the respondent's solicitors did not deal with the matter well in advance of the hearing scheduled for 13 December 2024.  There was nearly six weeks in which to do so.  Regrettably, the matter having been left in abeyance until the eve of the 13 December 2024 hearing, the parties and the court had to prepare for, attend and accommodate an appearance that should have been avoidable.

12. In the circumstances, orders were made on 13 December 2024 for the respondent to file an application in an appeal, supported by an affidavit, dealing with the effect, if any, of the appellant's bankruptcy on the continuation of the appeal. The respondent was to serve the application and supporting affidavit on the appellant and the appellant's trustee‑in‑bankruptcy. The appellant and the appellant's trustee-in-bankruptcy were given an opportunity to respond to the application. An order was also made, pursuant to r 7(1)(b) of the Supreme Court (Court of Appeal) Rules 2005 (WA), that the court determine the respondent's application on the basis of the documents filed and without listing the application for an oral hearing.

13. The respondent filed its application in an appeal on 20 December 2024. The application was supported by an affidavit of Lawrence Yen Teck Lee sworn 20 December 2024. Mr Lee is the respondent's solicitor. Mr Lee confirmed the fact of the appellant's bankruptcy with effect from 1 November 2024 and the appointment of Mr Vines, with another, as joint and several trustees-in-bankruptcy of the appellant's bankrupt estate. Mr Lee also produced an email dated 3 December 2024, sent on behalf of Mr Vines as trustee-in-bankruptcy, in which it was stated that in accordance with s 60(2) of the Bankruptcy Act 1966 (Cth) 'the trustee has made an election to seek dismissal of the appeal made by the bankrupt with no orders as to costs'.

14. The respondent's application in an appeal seeks findings, or alternatively, declarations, that pursuant to s 60(2) of the Bankruptcy Act the appeal was stayed from the date of the appellant's bankruptcy and that the trustee-in-bankruptcy has elected in writing to discontinue the appeal.  The respondent seeks orders that:

    1.The appeal be dismissed.

    2.The appellant pay the respondent's costs of the appeal to be taxed if not agreed.

15. The trustee-in-bankruptcy's position in response to the respondent's application is expressed in an email to the court dated 8 January 2025.  There has been no change in the trustee's position since the consent notice dated 13 December 2024.  Accordingly, the trustee-in-bankruptcy consents to the dismissal of the appeal on terms that there be no order as to costs.

16. The appellant takes a similar position to his trustee-in-bankruptcy.  The appellant filed an answer to the application dated 10 January 2025.  In that document the appellant stated that he opposed the costs order sought by the respondent and requested that there be no order as to the costs of the appeal.  Otherwise no issue is taken with the orders sought by the respondent.  The appellant also filed an affidavit, sworn by him on 10 January 2025, in which he deposed that the consent notice dated 13 December 2024 was prepared by the respondent's solicitors on terms agreed between the respondent's solicitors and the trustee-in-bankruptcy.  The appellant deposed that he had signed the 13 December 2024 consent notice at the request of the trustee-in-bankruptcy.

17. Section 60(2) - (4) of the Bankruptcy Act provides:

    (2)An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.

    (3)If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.

(4)Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of:

(a)any personal injury or wrong done to the bankrupt, his or her spouse or de facto partner or a member of his or her family; or

(b)the death of his or her spouse or de facto partner or of a member of his or her family.

1. In s 60 the term 'action' means any civil proceeding whether at law or in equity: Bankruptcy Act s 60(5). An appeal is an action within the meaning of s 60(5) of the Bankruptcy Act:  Cummings v Claremont Petroleum NL.[3]

   [3] Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124, 130.

2. The operation of s 60(2) - (4) has been considered in a number of decisions of this court. See for example Fletcher v Westpac;[4] Christovao v Tan and Tan Lawyers Pty Ltd [No 2];[5] Mullins on behalf of Settlers House Pty Ltd (in liq) v Directline Finance Pty Ltd;[6] Lee v Lawfirst Pty Ltd;[7] and Lee v The State of Western Australia.[8]  It should, however, be apparent that in this appeal no question arises as to whether the appeal constitutes an action commenced by the appellant before he became a bankrupt in respect of a personal injury or wrong done to the appellant.  There was no contention to that effect on behalf of the appellant.  Nor could there have been.  The appeal is against a money judgment entered against the appellant pursuant to a guarantee.  The only relevant question for present purposes is whether the appeal has been stayed, and following election, is to be treated as having been discontinued.

   [4] Fletcher v Westpac [2012] WASCA 154 [10] - [15], [18] - [22].

   [5] Christovao v Tan and Tan Lawyers Pty Ltd [No 2] [2017] WASCA 171 [4] - [8].

   [6] Mullins on behalf of Settlers House Pty Ltd (in liq) v Directline Finance Pty Ltd [2020] WASCA 166 [13], [20], [21], [23].

   [7] Lee v Lawfirst Pty Ltd [2023] WASCA 59 [22] - [29].

   [8] Lee v The State of Western Australia [2023] WASCA 165 [15] - [20].

3. Section 60(2) of the Bankruptcy Act was engaged on the appellant becoming a bankrupt on 1 November 2024. The appeal was, by operation of s 60(2), stayed until the trustee-in-bankruptcy made an election, in writing, to prosecute or discontinue the action. That election was made in the email dated 3 December 2024. Although, in terms, the email says that the trustee-in-bankruptcy has made an election to seek 'dismissal', the invocation of s 60(2) in the trustee-in-bankruptcy's email signifies an unequivocal intention to discontinue the appeal.

4. It is appropriate that this court give effect to the discontinuance.

5. The Supreme Court (Court of Appeal) Rules 2005 (WA) provides for the means by which an appellant may discontinue an appeal: r 59. However, the present case does not concern a discontinuance by the appellant; it is a discontinuance by the appellant's trustee-in-bankruptcy pursuant to s 60(2) of the Bankruptcy Act.  That is something which ought to be recorded, appropriately, in an order of the court providing for the conclusion of the appeal.  Sometimes issues arise as to the proper form of such an order.  For example, in Fletcher v Westpac the court declined to order an immediate dismissal of the appeal where the interests of third parties might be adversely affected.  There is no suggestion that this might occur in the present case.  Both the appellant and the appellant's trustee-in-bankruptcy accept that there should be an order providing for the dismissal of the appeal.  In the circumstances, I propose to make an order modelled on the kind of order made in Christovao v Tan and Tan Lawyers Pty Ltd [No 2] [12.1].

6. The remaining issue is the question of costs.  In circumstances where, up to 13 December 2024, the parties and the trustee-in-bankruptcy evidently proceeded on the basis that the appeal should be dismissed with no order as to costs, I decline to exercise my discretion to order that the appellant pay the respondent's costs of the appeal.  The respondent has not articulated any proper basis why it ought to be permitted to resile from the original position it adopted as to costs in the consent notices dated 11 and 13 December 2024.  The only change in circumstance is that the respondent has brought its application in an appeal dated 20 December 2024.  However, it was only necessary for the respondent to bring the application in an appeal because of the delay in dealing with the appellant's bankruptcy.  The fact of the application provides no basis for a different order as to costs.  It is appropriate, and consistent with the interests of justice, that costs be provided for conformably with the terms of the two consent notices.

7. For these reasons I will order that:

   1.The appeal is dismissed on the ground that, pursuant to s 60(2) of the Bankruptcy Act 1966 (Cth), the appellant's trustee-in-bankruptcy has elected in writing to discontinue the appeal.

   2.There is no order as to the costs of the appeal.

8. For the avoidance of doubt, in ordering that there be no order as to the costs of the appeal, I include within the costs of the appeal the costs of and incidental to the respondent's application in an appeal dated 20 December 2024.

9. My decision has been made in exercise of the jurisdiction under r 7(1)(b) of the Supreme Court (Court of Appeal) Rules. Accordingly, r 19 applies: r 7(2). The decision operates as a provisional decision and will only become a final decision in the absence of the filing of a Form 12 within five working days after the date on which the parties are served with the notice of the provisional decision. Accordingly, the orders that I now make, to be issued together with the publication of these reasons, are subject to the process under r 19.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

SD

Associate to the Hon Justice Vaughan

15 JANUARY 2025