Ellison v James Jamieson
[2012] FMCA 211
•8 March 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ELLISON v JAMES JAMIESON | [2012] FMCA 211 |
| INDUSTRIAL LAW – Small claims jurisdiction – matter adjourned after sequestration order made against respondent – common respondent – matter adjourned to allow applicant to make application for Court to take further step in proceeding– substantive proceeding for a provable debt – proceedings stayed. |
| Fair Work Act 2001 (Cth) s.548 Bankruptcy Act 1966 (Cth) ss.58(3), 60, 82 |
| Ellison v James Jamieson [2011] FMCA 734 Cotis v Macpherson [2007] FMCA 2060 |
| Applicant: | AMANDA ELLISON |
| Respondent: | JAMES JAMIESON |
| File Number: | MLG 516 of 2011 |
| Judgment of: | O’Sullivan FM |
| Hearing date: | 8 March 2012 |
| Date of Last Submission: | 8 March 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 8 March 2012 |
REPRESENTATION
| The Applicant: | No appearance |
| The Respondent: | No appearance |
ORDERS
The proceedings be stayed by virtue of section 58(3) of the Bankruptcy Act 1966.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 516 of 2011
| AMANDA ELLISON |
Applicant
And
| JAMES JAMIESON |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
Before the Court today, 8 March 2012, is the matter of Ellison v James Jamieson. The procedural background to this matter is set out in Ellison v James Jamieson [2011] FMCA 734. For the reasons set out in that decision on 16 September 2011 the matter was adjourned to Friday, 10 February 2012.
Before the matter retuned to Court on Friday 10 February 2012 however, a sequestration order was made against the respondent on
23 January 2012 and trustees were appointed to the respondent’s bankrupt estate. Those trustees being, Matthew Golan c/- Foremans Business Services, Suite 8, 56 Bay Road, Sandringham, Victoria 3191.
The aforementioned trustees wrote to the Court indicating that they were aware of the adjourned date of 10 February 2012 and indicated that:
“Please note that section 58(3) of the Bankruptcy Act 1966 states that without the leave of the Court it is not competent for the creditors to take any fresh step in proceedings against the bankrupt. I would be grateful if the parties concerned would contact my office to note their claims in the estate”
On 10 February 2012 the applicant appeared in person. The respondent also appeared and notwithstanding the email to the Court referred to earlier there was no appearance entered by or on behalf of the trustees of the respondent’s bankrupt estate. The applicant in this matter applied for, by way of oral application, and was granted for reasons given
ex temporeat the time an adjournment so he could consider his position in light of the sequestration order made against the respondent on 23 January 2012.
On 10 February 2012 the Court made the following orders:
“THE COURT ORDERS THAT:
1.The proceedings be adjourned for Mention on 8 March 2012 at the Federal Magistrates Court of Australia at Melbourne commencing at 10.00 am.
2.The Applicant shall file and serve any further application by not later than 1 March 2012.
3.The Applicant shall serve the Trustee of the Respondent’s bankrupt estate, C/O- Matthew Gollant at Foremans Business Services, Suite 8, 56 Bay Road, Sandringham Victoria 3191 with a sealed copy of these orders.
AND THE COURT NOTES:
A.The proceedings were adjourned at the request of the applicant in light of the sequestration order against the respondent on 23 January 2012.”
This morning when the matter has been called during the call-over of the matters listed for mention there was no appearance for the applicant. There has been no appearance by or on behalf of either the respondent or the trustees of his bankrupt estate. That at least in relation to the last mentioned person is explicable as there is no evidence the applicant served the trustee of the respondent’s bankrupt estate with the orders of 10 February 2012.
It is also clear from the Court file that no application has been made by the applicant such as would be required under section 58(3) of the Bankruptcy Act 1966 (“the Bankruptcy Act”) so as to enable the Court to take a further step in these proceedings.
I have already, on transcript this morning, read out an email received from the applicant who, like the two other applicants also have proceedings against the respondent and who in correspondence sent to the Court on 6 March 2012 indicated that she was writing to the Court on behalf of all these applicants.
The applicant said in that email she believes that the respondent needs to be made accountable for his actions, not just the alleged underpayment of wages but what he put the applicant through when she says she had the misfortune to work for the respondent.
The Court today is faced with the situation where the applicant has been granted an indulgence of an adjournment in order to consider whether an application should be brought to ask the Court to take a fresh step in these proceedings in the face of the appointment of a trustee to the respondent’s bankrupt estate.
The respondent became bankrupt after the institution of this proceeding and a question arose whether the proceeding might be stayed by the operation of s.58(3) of the Bankruptcy Act as a result of correspondence received referred to earlier.
Sections 58 and 60 of the Bankruptcy Act relevantly provides as follows:
“58. Vesting of property upon bankruptcy--general rule
(1) Subject to this Act, where a debtor becomes a bankrupt:
(a)the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b)after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
…
(3)Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b)except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
…
60. Stay of legal proceedings
(1)The Court may, at any time after the presentation of a petition, upon such terms and conditions as it thinks fit:
…
(b)stay any legal process, whether civil or criminal and whether instituted before or after the commencement of this subsection, against the person or property of the debtor:
(i) in respect of the non-payment of a provable debt or of a pecuniary penalty payable in consequence of the non-payment of a provable debt; or
(ii) in consequence of his or her refusal or failure to comply with an order of a court, whether made in civil or criminal proceedings, for the payment of a provable debt;
and, in a case where the debtor is imprisoned or otherwise held in custody in consequence of the non-payment of a provable debt or of a pecuniary penalty referred to in subparagraph (i) or in consequence of his or her refusal or failure to comply with an order referred to in subparagraph (ii), discharge the debtor out of custody.
…
In this section, action means any civil proceedings, whether at law or in equity.
Section 82 of the Bankruptcy Act defines what constitutes a “provable debt” for the purposes of sections 58 and 60 of the Bankruptcy Act. It provides that:
“82. Debts provable in bankruptcy [see Table B]
(1)Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
…
(2)Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.
(3)Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.
…
(8)In this section, liability includes:
(a)compensation for work or labour done;
(b)an obligation or possible obligation to pay money or money's worth on the breach of an express or implied covenant, contract, agreement or undertaking, whether or not the breach occurs, is likely to occur or is capable of occurring, before the discharge of the bankrupt; and
(c)an express or implied engagement, agreement or undertaking, to pay, or capable of resulting in the payment of, money or money's worth, whether the payment is:
(i) in respect of amount--fixed or unliquidated;
(ii) in respect of time--present or future, or certain or dependent on a contingency; or
(iii) in respect of the manner of valuation--capable of being ascertained by fixed rules or only as matter of opinion.”
Upon the declaration of bankruptcy all property of the bankrupt vests in the Official Trustee (s.58(1)). Therefore, a “creditor” may not commence or take a fresh step in any legal proceedings if the proceedings are in respect of a “provable debt” (s.58(3)).
In order to determine if leave is required under s.58(3) it is necessary to consider whether the relevant proceedings are as specified in that provision “in respect of a provable debt”.
The words “in respect of” are widely construed, particularly in light of the policy underlying that provision and the Bankruptcy Act generally of ensuring a fair distribution of the bankrupt’s assets among creditors, so that no one creditor receives undue advantage (see Re Sharp; Ex parte Tietyens Investments Pty Ltd (in liq) [1998] FCA 1367 at 7 and Green v Schneller (2001) 189 FLR 82 at 85-87).
The nexus required between the proceeding and the provable debt may be both direct and indirect (see Melnik v Melnik [2005] FCAFC 160 at [45]-[48]).
The term “provable debt” is broadly defined in s.82(1) of the Bankruptcy Act and would appear to apply to the recovery of, for example, payments sought from the respondent to satisfy any outstanding employee entitlements (see Storey v Lane (1981) 147 CLR 549).
The history in this matter that I have set out is the applicant failed to file an application such as contemplated by section 58(3) of the Bankruptcy Act and the applicant has already been granted the indulgence for an adjournment to see whether that could be done. I note what the applicant has told me today. The trustees of the respondent’s bankrupt estate have not been served with the latest orders. It would appear that the proceedings for the recovery of underpayment of wages sought from the respondent come within the definition of a provable debt. Therefore proceedings are otherwise stayed.
However, I do wish to note the decision of Driver FM in Cotis v Macpherson [2007] FMCA 2060. I do so in the context of this matter where it is clear that the applicant has been receiving assistance, albeit not recently from the Fair Work Ombudsman.
The Fair Work Ombudsman is the statutory officer with responsibility for enforcing the provisions of the Fair Work Act 2009 (Cth) (“the Fair Work Act”). As the decision of Driver FM makes clear if the Fair Work Ombudsman had commenced proceedings against the respondent for penalties as a result of breaches of the Fair Work Act those proceedings may not necessarily be defined to be with respect to a provable debt for the purposes of the Bankruptcy Act. I will cause a copy of these reasons which refer to Cotis v Macpherson to be ordered, placed on the file and they can be brought to the attention of the Fair Work Ombudsman.
I will order that these proceedings be otherwise stayed.
I certify that the preceding twenty two (22) paragraphs are a true copy of the reasons for judgment of O’Sullivan FM
Date: 8 March 2012
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