GCS Rapid Access Pty Ltd v Sizer
[2012] FMCA 655
•1 August 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GCS RAPID ACCESS PTY LTD v SIZER & ANOR | [2012] FMCA 655 |
| BANKRUPTCY – Leave to commence or take fresh steps in proceedings. |
| Bankruptcy Act 1966 (Cth), s.58(3)(b) |
| Allansonv Midland Credit Limited & Another (1977) 30 FLR 108 Fraser v Commissioner of Taxation & Anor (1996) 99 FCR 99 Green v Schneller & Anor (2001) 164 FLR 82; [2001] NSWSC 897 Hall v Warner [2006] FCA 852 Macquarie Bank Limited v Bardetta (2005) 3 ABC (NS) 190; [2005] FCA 507 Re Killington; Ex parte Chisholm v The Official Trustee (unreported, Federal Court of Australia, Mansfield J, 20 November 1998) |
| Applicant: | GCS RAPID ACCESS PTY LTD |
| First Respondent: | WARREN FRANCIS SIZER |
| Second Respondent: | MARK ANTHONY CONLAN AS TRUSTEE OF THE BANKRUPT ESTATE OF WARREN FRANCIS SIZER |
| File Number: | PEG 157 of 2012 |
| Judgment of: | Lucev FM |
| Hearing date: | 30 July 2012 |
| Date of Last Submission: | 30 July 2012 |
| Delivered at: | Perth |
| Delivered on: | 1 August 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms A Symons |
| Solicitors for the Applicant: | Trinix Lawyers |
| Counsel for the Respondents: | No appearance |
| Solicitors for the Respondents: | No appearance |
ORDERS (on 30 July 2012)
The Applicant is granted leave, pursuant to s.58(3)(b) of the Bankruptcy Act 1966 (Cth), to continue with legal proceeding matter number 1201 of 2011 against the First Respondent in the District Court of Western Australia.
AND FURTHER ORDERS (on 1 August 2012)
A copy of the Court’s order of 30 July 2012, together with these Reasons for Judgment and this further order, be served on the Second Respondent, with service to be effected by facsimile, by 4.00pm on 3 August 2012.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 157 of 2012
| GCS RAPID ACCESS PTY LTD |
Applicant
And
| WARREN FRANCIS SIZER |
First Respondent
| MARK ANTHONY CONLAN AS TRUSTEE OF THE BANKRUPT ESTATE OF WARREN FRANCIS SIZER |
Second Respondent
REASONS FOR JUDGMENT
(Delivered in Chambers pursuant to s.13(3)(a) of the Federal Magistrates Act 1999 (Cth))
Application and order
The applicant has applied for an order for leave pursuant to s.58(3)(b) of the Bankruptcy Act 1966 (Cth)[1] to continue with a legal proceeding, in matter number 1201 of 2011, against the first respondent, a bankrupt, Warren Francis Sizer,[2] in the District Court of Western Australia.[3]
[1] “Bankruptcy Act”.
[2] “Bankrupt”.
[3] “District Court Proceedings” and “District Court” respectively.
At a hearing on 30 July 2011, the Court made an order granting the leave sought by the applicant, and indicated that short Reasons for Judgment would follow. These are those Reasons for Judgment.
At the outset, it is relevant to note that the Court was informed by Counsel for the applicant that the second respondent, who is the first respondent’s trustee in bankruptcy,[4] was aware of this application and had informed the applicant’s solicitors that he would abide by the order of the Court in respect of the application. The Trustee was also aware that the District Court Proceedings had been adjourned pending the hearing of this application in this Court.
[4] “Trustee”.
History
The history of the matter is set out in the affidavit of Craig Allan Wilson, sworn 6 July 2012 as follows:
a)the applicant commenced the District Court Proceedings against the Bankrupt and Silent Vector Pty Ltd[5] by Statement of Claim dated 29 June 2011 and the District Court Proceedings have not yet been determined;
[5] “Silent Vector”.
b)the applicant is claiming the sum of $238,936.67 plus costs and interest in relation to the supply of goods and services pursuant to a trade agreement signed by the Bankrupt on behalf of Silent Vector on or about 1 August 2007;[6]
[6] “Trade Agreement”.
c)incorporated in the Trade Agreement was a guarantee and indemnity[7] whereby the Bankrupt agreed to, amongst other things, guarantee payment of all monies owed or owing to the applicant;
[7] “Guarantee”.
d)the Trade Agreement contained a clause under which Silent Vector and the Bankrupt warranted and agreed that where they were, at the time of executing the document or at any time Silent Vector had credit with the applicant, a trustee of any trust:[8]
[8] “Trust”.
i)to produce a stamped copy of the Trust deed (with all amendments) if and when requested by the applicant;
ii)that they had full power and authority to execute, or continue with their obligations under, the document on behalf of the Trust as if they were doing so in their individual capacity and in their several capacity as trustee;
iii)that they would be bound by the terms and conditions of the document in their individual capacity, or further or alternatively, in their several capacity as trustee; and
iv)that the assets of the Trust would be available to meet payment of their obligations to the applicant;
e)the Bankrupt, in his capacity as joint trustee of the Sizer Superannuation Fund, is one of the registered proprietors of the property commonly known as 106 Briggs Street, Welshpool, being more particularly described as Lot 1 on Survey-Strata Plan 49149 and being the whole of the land comprised in Certificate of Title Volume 2628 Folio 533;[9]
f)on or about 21 December 2010 the applicant lodged caveat no. L514030 over the Bankrupt’s interest in the Welshpool Property;[10]
g)on 7 April 2011 Landgate issued a lapsing notice on the Caveat at the request of the Bankrupt; and
h)on 21 April 2011 the Supreme Court of Western Australia made an order extending the operation of the Caveat until the further order of that Court on the basis the District Court Proceedings will need to be pursued and determined.
[9] “Welshpool Property”.
[10] “Caveat”.
Relief sought
The relief sought by the applicant against the Bankrupt in the District Court Proceedings, is as follows:
a)the sum of $238,936.67;
b)reasonable debt collection costs and legal costs;
c)a declaration that the applicant has a caveatable interest over the Bankrupt’s interest in the Welshpool Property; and
d)interest and costs on a solicitor/client basis pursuant to the Trade Agreement.
Consideration
The legal proceedings in which fresh steps are sought to be taken against the Bankrupt must be “in respect of a provable debt”.[11] The words “in respect of” in s.58(3)(b) of the Bankruptcy Act are to be construed widely.[12] There may be an indirect nexus between the proceeding in respect of which leave is sought and the provable debt.[13] Thus:
a)proceedings to set aside Family Court consent orders entered into by fraud to alienate property have been held to be proceedings in respect of a provable debt;[14] and
b)a claim for avoidance of a transfer of property by a bankrupt in circumstances said to have made it a fraudulent disposition have been held to be proceedings in respect of a provable debt.[15]
[11] Bankruptcy Act, s.58(3)(b).
[12] Fraser v Commissioner of Taxation & Anor (1996) 99 FCR 99 at 112-114 per Beaumont J (“Fraser”).
[13] Fraser at 113-114 per Beaumont J.
[14] Fraser.
[15] Green v Schneller & Anor (2001) 164 FLR 82; [2001] NSWSC 897.
In Hall v Warner the Federal Court succinctly set out the circumstances in which the Federal Court or this Court may grant leave under s.58(3)(b) of the Bankruptcy Act, namely:
“… if it considers that the issues would be better and more comprehensively dealt with by a contested trial of the action in the Supreme Court than would be the case if the applicants were required to lodge a proof of debt in respect of the bankrupt estate.”[16]
[16] Hall v Warner [2006] FCA 852 at para.7 per Cowdroy J (“Hall”), citing Allansonv Midland Credit Limited & Another (1977) 30 FLR 108 at 114 per Bowen CJ, Riley and Deane JJ (“Allanson”) and Macquarie Bank Limited v Bardetta (2005) 3 ABC (NS) 190 at 198-199 per Conti J; [2005] FCA 507 at paras.19-21 per Conti J (“Bardetta”).
To grant leave does not require the Court to consider the merits of the issues raised.[17] Rather, it requires the Court to determine whether the issues are complex, and able to be resolved more thoroughly and expeditiously in the proceedings in respect of which leave is sought, than under the proof of debt procedure.[18] In making the determination the Court may consider whether there are multiple claims arising in the proceedings, and whether they all ought to be resolved at once.[19]
[17] Re Killington; Ex parte Chisholm v The Official Trustee (unreported, Federal Court of Australia, Mansfield J, 20 November 1998) at 11 per Mansfield J (“Killington”).
[18] Hall at para.8 per Cowdroy J.
[19] Hall at para.8 per Cowdroy J.
In this case there can be no question that the proceedings are in respect of a provable debt, being the $238,936.67 claimed, but that there is also a nexus between the District Court Proceedings and the provable debt in relation to the caveatable interest in the Welshpool Property. Because of the nature of the property issues involved in this matter (which have also been the subject of proceedings in the Supreme Court of Western Australia) the Court considers the District Court Proceedings for which leave to continue is sought is the better forum to deal with the dispute the subject of the District Court Proceedings, as it is an integral part of those proceedings that the caveatable interest in the Welshpool Property be sorted out, and is a proper matter for the District Court to determine, rather than the Trustee to determine under a proof of debt procedure. It is, therefore, appropriate to grant leave under s.58(3)(b) of the Bankruptcy Act to allow the District Court Proceedings to continue.
From what was put to the Court on 30 July 2012 it would appear that the Trustee is involved in the District Court Proceedings. Given that the Trustee did not appear before the Court on 30 July 2012 the order of 30 July 2012 was made without conditions, and that remains so. It is however appropriate to order that the Trustee be provided with a copy of the order of 30 July 2012, as well as these Reasons for Judgment, and the further order so ordering. Although the present order is unconditional it remains open to the Trustee to make application to this Court for further orders in relation to the District Court Proceedings or any relief granted by the District Court.
For the above reasons, the Court made the order granting leave to proceed under s.58(3)(b) of the Bankruptcy Act in Court on 30 July 2012.
The Court also now further orders that a copy of the Court’s order of 30 July 2012, together with these Reasons for Judgment, and the further order, be served on the Trustee, with service to be effected by facsimile, by 4.00pm on 3 August 2012.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 1 August 2012
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