FALZON v Efim Pilipczyk Pty Ltd
[2005] FMCA 1969
•30 November 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FALZON & ANOR v EFIM PILIPCZYK PTY LTD & ANOR | [2005] FMCA 1969 |
| BANKRUPTCY – Trustee – interim application – application by bankrupts for extension of time for trustee to make election in respect of court proceedings – where applicants have no standing. |
| Bankruptcy Act 1966 (Cth), ss.58,60,156A |
| First Applicant: | ALBERT FALZON |
| Second Applicant: | DONNA FALZON |
| First Respondent: | EFIM PILIPCZYK PTY LTD |
| Second Respondent: | MARK ROBINSON |
| File Number: | SYG 3594 of 2005 |
| Judgment of: | Scarlett FM |
| Hearing date: | 30 November 2005 |
| Date of Last Submission: | 30 November 2005 |
| Delivered at: | Sydney |
| Delivered on: | 30 November 2005 |
REPRESENTATION
| Solicitor for the Applicant: | Stephen Hodges |
| Counsel for the Respondent: | Mr Johnson |
| Solicitors for the Respondent: | P.J. Donnellan & Co |
ORDERS
That the interim application is dismissed.
That the Applicant pay the First Respondent’s costs fixed in the sum of $1,500.00.
The application is adjourned to Friday 16th December 2005 at 10.15am before a Registrar.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 3594 of 2005
| ALBERT FALZON |
First Applicant
| DONNA FALZON |
Second Applicant
And
| EFIM PILIPCZYK PTY LTD |
First Respondent
| MARK ROBINSON |
Second Respondent
REASONS FOR JUDGMENT
Application
This is an interim application for an order that the time for the trustee of the bankrupt estates of the applicants to make an election to prosecute or discontinue action No. 445 of 2004 in the District Court of New South Wales be extended until further order of the court.
The circumstances of this matter, on the basis of the affidavit material before me, are to say the least, most unfortunate. The applicant's difficulties arose after they engaged one of the respondents to this application to design and build a second storey of their home. Problems developed with the building contract and since February 2003 the applicants deposed that they have been engaged in litigation with the respondent. Initially the first respondent lodged a claim for payment of $9,900.00 in Consumer Trader and Tenancy Tribunal, the applicants lodged a cross claim for $300,000.00. The applicants deposed that they had engaged a barrister to act for them in the Consumer Trader and Tenancy Tribunal. They say that in October 2004 the barrister who appeared for them gave them certain advice about transferring the case to the District Court. The cross claim, as they say, was transferred to the District Court but the original claim by the first respondent against the applicants remained in the Consumer Trader and Tenancy Tribunal.
I certainly agree with the comments made by Mr Hodges who appears for the applicants today and who I hasten to add did not act at the time. This was an odd method of procedure, to split cross-claims relating to what he described as the same material. In any event the applicants said that the hearing in the Consumer Trader and Tenancy Tribunal has resulted in certain circumstances which the applicants say related to their legal adviser acting without their instructions. A judgment was entered by consent against the applicants in favour of the first respondent or an order was obtained which was duly registered and a judgment was obtained.
After dismissing their then legal adviser the applicants obtained other legal advice and in due course were served with a bankruptcy notice and later a creditors petition. The first applicant deposed that he misplaced the creditors petition for a while but found it on the eve of the return date and the two applicants appeared in court on the return date which was 7th September 2005. At that stage the first applicant informed the court that he was sick.
The first applicant deposed that it was his understanding that the registrar would adjourn the proceedings until a date to be fixed and the applicants were told by the registrar that they would receive a notice of the next court date in the mail. The applicant deposed that he did not receive any notice from the court or from the legal representative of the first respondent advising him of any court listing and on 25th October a sequestration order was made in the absence of both of the applicants.
The applicants have now lodged an application seeking as a final order that the sequestration order be annulled. In their affidavit material they've set out details of their assets. The first applicant makes the claim “I am not bankrupt”. He may be using that term in the popular sense but in reality, as a result of the sequestration order, he cannot make that claim. He may certainly say that he is not insolvent but in any event the applicants say that they are in a position to pay the debt due to the first respondent immediately if the sequestration order is annulled, that they have money immediately available, but they are unable to do so as a result of the sequestration order having been made.
They depose that they have sent a copy of relevant material to the second respondent to the application who is in fact the trustee and the applicants are concerned that at the expiration of 28 days from the date of service of the notice to the second respondent that their District Court claim will be taken to be abandoned. They wish to continue with that claim and have evidence to allow them to proceed with it.
The application is opposed by the first respondent and the second respondent trustee has entered a submitting appearance save as to costs.
As I have indicated earlier I am certainly not in a position to embark on an application in respect of the final orders sought, being to annul the sequestration order. The interim order which is sought is of itself proposed - and for the respondents, Mr Johnson of counsel submits that the applicants have no standing to in fact bring such an action, even though it is conceded that in certain circumstances the court may extend the time for the election that is a matter of the court's discretion.
That is put, however, on the basis that any application for such an extension should be brought, not by the applicants themselves but by the second respondent to this application, that is the trustee. In my view there is substance to the objections raised by the respondents, in particular s.58 of the Bankruptcy Act sets out a general rule that where a debtor becomes bankrupt, the property of the bankrupt vests forthwith in the official trustee or, if at the time when the debtor becomes a bankrupt, the registered trustee becomes the trustee of the estate of the bankrupt by virtue of s.156A in that registered trustee.
More importantly, perhaps s.60 of the Bankruptcy Act relates to the stay of legal proceedings, in particular sub-s.2 provides that an action commenced by a person who subsequently becomes a bankrupt is, upon his becoming a bankrupt, stayed until the trustee makes election in writing to prosecute or discontinue the action. Sub-s.3 provides that if the trustee does not make such an election within 28 days after notice of the action was served upon him by a defendant or other party to the action he shall be deemed to have abandoned the action. This indeed is the concern of the applicants, they have a significant claim against the first respondent in the District Court which at this stage has not come to court and that claim relates not just to a property claim but certain personal matters as well.
The difficulty for the applicants that I see is that I do not have in evidence before me details of the action itself in the District Court. If it is a claim, a money claim relating to property, then indeed it falls to the trustee to make an election in writing to prosecute or discontinue the action. For the applicants Mr Hodges, solicitor, said that the District Court proceedings claim personal wrongs and therefore his clients do have standing. In my view that does not represent the law. If it is in fact the case that the District Court claim relates to personal wrongs they do not have standing to make this application because they do not need to make this application, as Mr Johnson submits.
Sub-s.60(4) (a) provides that notwithstanding anything contained in this section a bankrupt may continue in his own name an action commenced by him before he became a bankrupt in respect of (a) any personal injury or wrong done to the bankrupt, his spouse or a member of his family.
In my view this is where the case should lie. If it is in the District Court a money claim then the applicants do not have standing to bring this application, it is the second respondent, the trustee, who should have brought such a proceeding. If the action in the District Court is an action for personal injury or wrong done to the bankrupt or bankrupts in this case, or a member of their family then they have no need to apply for an extension because their claim is not deemed to have been abandoned under sub-s.60(3). Either way, in my view, the application cannot succeed and it must therefore be dismissed. I dismiss the application.
I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: S.Polley
Date: 12 January 2006
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