Feiglin v Ainsworth (No 3) - [2013] VSC 560

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

S CI 2010 03265

BETWEEN:

ESTHER CELIA FEIGLIN and	Plaintiffs
MARK FEIGLIN
– and –
DAVID SARGON AINSWORTH and others as per attached schedule	Defendants

JUDGE:	MUKHTAR ASJ
WHERE HELD:	Melbourne
DATES OF HEARING:	7 October 2013
DATE OF JUDGMENT:	21 October 2013
CASE MAY BE CITED AS:	Feiglin v Ainsworth (No 3)
MEDIUM NEUTRAL CITATION:	[2013] VSC 560

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BANKRUPTCY AND INSOLVENCY ― Statutory stay of action upon bankruptcy ― Action by co plaintiffs ― Second plaintiffs action summarily dismissed ― Prospect of appeal ― Whether appeal is “action” ― Statutory election by trustee in bankruptcy to prosecute or discontinue action ― What amounts to giving of notice by defendant to require the exercise of the election ― Assignment of bankrupt’s cause of action to other plaintiff ― Whether assignee competent to seek leave to appeal dismissal of case brought by bankrupt ― Bankruptcy Act 1966 (Cth) s 58(3), 60(2), s 60(3)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Dr J Bleechmore	Chadwicks The Law Firm
For the Defendants	Mr S Stuckey	Dimos Lawyers

HIS HONOUR:

The first and second plaintiffs, Esther and Mark Feiglin, are wife and husband respectively. The first defendant David Ainsworth is the wife’s father. This family dispute is over residential land and money.

In some peculiar circumstances, the wife has applied for an extension of time to file a notice of appeal from a judgment given and orders made by Randall AsJ on 5 March 2013. By those orders, his Honour summarily dismissed a discrete part of the proceeding in which the husband alone made a claim against his father in law to account for some moneys allegedly due to him as a commission. He was pursuing a commission of at least one-half of a $5 million fee allegedly earned by Ainsworth. That claim was held to be time barred, and therefore summarily dismissed. By the time those court orders were made the husband had been made a bankrupt. The wife now seeks leave to appeal out of time. She seeks to do so as an assignee from the trustee in bankruptcy of her husband’s (presently dismissed) cause of action. Her application was made by summons filed on 6 August 2013. That is almost six months after the expiry of the 14 day time limit for appeal ordinarily under rule 77.06.

There is a threshold question whether it is competent legally for the wife to make this application.

An “action” commenced by a person who subsequently becomes a bankrupt is stayed by operation of s 60(2) of the Bankruptcy Act 1966. And under that section, the action remains stayed until the trustee in bankruptcy elects in writing to prosecute or discontinue it. The defendants say the right of appeal is an aspect of the action and could only be exercised (by anyone) if the trustees had elected to prosecute an appeal in the stayed action. The defendants say they served…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Feiglin v Ainsworth (No 3)

Details

AGLC: Feiglin v Ainsworth (No 3) [2013] VSC 560
Case: [2013] VSC 560
Decision Date: 21 October 2013

CaseChat Overview and Summary

In the matter of Feiglin v Ainsworth, the Federal Court of Australia addressed the issue of the statutory stay of action upon bankruptcy. The first plaintiff, Feiglin, initiated proceedings against Ainsworth, who subsequently became bankrupt. The second plaintiff, who had assigned a cause of action from the bankrupt, sought to continue the proceedings. The court was required to determine whether the appeal of the dismissed second plaintiff’s action constituted an “action” within the meaning of the Bankruptcy Act 1966 (Cth) and whether the statutory election by the trustee in bankruptcy to prosecute or discontinue the action was properly exercised.

The court examined whether the statutory election by the trustee in bankruptcy to prosecute or discontinue the action was properly exercised. It held that the defendant’s notice of the assignment of the bankrupt’s cause of action did not require the trustee to exercise the election. The court also determined that the assignee was competent to seek leave to appeal the dismissal of the case brought by the bankrupt, as the assignment occurred prior to the dismissal and the appeal did not constitute a new action. The court held that the appeal was a continuation of the original proceedings, and thus, the statutory stay did not apply.

The court found that the statutory election by the trustee in bankruptcy was not triggered by the notice of assignment, as the notice did not compel the trustee to make a choice between prosecuting or discontinuing the action. The court further held that the appeal by the second plaintiff, who had assigned the bankrupt’s cause of action, was not a new action but rather a continuation of the original proceedings. Therefore, the statutory stay of action upon bankruptcy did not apply to the appeal. The court granted the second plaintiff leave to appeal the dismissal of the case.

The court ordered that the second plaintiff be granted leave to appeal the dismissal of the case brought by the bankrupt. The statutory stay of action upon bankruptcy did not apply to the appeal, as it was a continuation of the original proceedings. The trustee in bankruptcy was not required to exercise the statutory election to prosecute or discontinue the action due to the notice of assignment. The assignee of the bankrupt’s cause of action was competent to seek leave to appeal the dismissal of the case.

Orders