Gibson, Margaret Gwen v Gibson, Michael Arthur

[1998] FCA 151

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7040 of 1998

BETWEEN:

MARGARET GWEN GIBSON
APPLICANT

AND:

MICHAEL ARTHUR GIBSON
FIRST RESPONDENT

THE OFFICIAL TRUSTEE IN BANKRUPTCY
SECOND RESPONDENT

JUDGE:

LINDGREN J

DATE:

20 JANUARY 1998

PLACE:

SYDNEY

REASONS FOR JUDGMENT
(ex tempore)

INTRODUCTION

The applicant (“Mrs Gibson” and “the Wife”) is the former wife of the first respondent (“Mr Gibson” and “the Husband”). The second respondent (“the Official Trustee”) is the trustee of Mr Gibson's bankrupt estate. Mrs Gibson seeks, by way of final relief, an order pursuant to s 153B of the Bankruptcy Act 1966 (Cth) (“the Act”) that Mr Gibson’s bankruptcy be annulled.

All that is being dealt with today is an application by Mrs Gibson for an order under s 35A of the Act that the proceeding be transferred to the Family Court of Australia. Mr Gibson, who appears in person, opposes the making of such an order. Ms Nash, solicitor, appears for the Official Trustee who submits to such order as the Court may make.

BACKGROUND
Subsections 35A(1) and (3) of the Act provide as follows:

“(1)     ... ,where a proceeding is pending in the Federal Court, the Federal Court may, on the application of a party to the proceeding or of its own motion, transfer the proceeding to the Family Court.

(2)...

(3)... ,where a proceeding is transferred to the Family Court: 

(a)the Family Court has jurisdiction to hear and determine the proceeding;

(b)the Family Court also has jurisdiction to hear and determine matters not otherwise within its jurisdiction (whether by virtue of paragraph (a) or otherwise):

(i)that are associated with matters arising in the proceeding; or

(ii)that, apart from subsection 32(1) of the Federal Court of Australia Act 1976, the Federal Court would have had jurisdiction to hear and determine in the proceeding;

(c)the Family Court may, in and in relation to the proceeding:

(i)grant such remedies;

(ii)make orders of such kinds; and

(iii)issue, and direct the issue of, writs of such kinds;

as the Federal Court could have granted, made, issued or directed the issue of, as the case may be, in and in relation to the proceeding;

(d)remedies, orders and writs granted, made or issued by the Family Court in and in relation to the proceeding have effect, and may be enforced by the Family Court, as if they had been granted, made or issued by the Federal Court;

(e)appeals lie from judgments of the Family Court given in and in relation to the proceeding as if the judgments were judgments of the Federal Court constituted by a single Judge, and do not otherwise lie; and

(f)subject to paragraphs (a) to (e) (inclusive), this Act, the Federal Court of Australia Act 1976, the Rules of Court made under that Act, and other laws of the Commonwealth, apply in and in relation to the proceeding as if:

(i)a reference to the Federal Court (other than in the expression ‘the Court or a Judge’) included a reference to the Family Court;

(ii)a reference to a Judge of the Federal Court (other than in the expression ‘the Court or a Judge’) included a reference to a Family Court Judge;

(iii)a reference to the expression ‘the Court or a Judge’ when used in relation to the Federal Court included a reference to a Family Court Judge sitting in Chambers;

(iv)a reference to a Registrar included a reference to a Registrar of the Family Court; and

(v)any other necessary changes were made.”

On 7 November last, Mr Gibson presented to the Official Receiver a petition against himself. The petition was accepted by the Official Receiver. By s 55(4A) (b) of the Act, upon the Official Receiver's endorsing the petition accordingly as required by s 55(4A) (a), Mr Gibson became a bankrupt by force of s 55 and by virtue of presentation of the petition. When he did so, s 58 of the Act produced the result that his property vested in the Official Trustee.

Section 153B provides that if the Court is satisfied in the case of the debtor's petition that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy. Section 153B does not indicate who may apply for an order under the section, but s 303 has the effect that in the circumstances of the present case, such an application may be made by any person aggrieved by, or interested in, the matter of the annulment. In my opinion, Mrs Gibson is such a person, as the circumstances referred to below will demonstrate.

Mrs Gibson commenced proceeding SY7846 of 1996 in the Family Court of Australia on 30 August 1996. In that proceeding, the Husband and the Wife were divorced on 14 November 1996.  Commencing on 11 November 1997, there was a hearing before Chisholm J in the Family Court of the Wife's application for orders under ss 79 and 85 of the Family Law Act 1975 (Cth). At the heart of the present application, is the fact that it was not disclosed to his Honour, or, apparently, to the legal representatives of Mr Gibson or Mrs Gibson, that only four days earlier, on 7 November, Mr Gibson had presented a debtor’s petition and become a bankrupt. The Wife's application in the Family Court was heard on 11 and 12 November and 19 and 22 December. In the course of that hearing, a considerable amount of evidence was given relating to the property of the Husband and the Wife, and their respective contributions to the building up of that property.

On 22 December 1997, Chisholm J delivered judgment.  The orders made in favour of the Wife included orders relating to two parcels of real estate, one of which, the former matrimonial home, was at 226 Willandra Road, Cromer, New South Wales, and the other of which, a property which had apparently been transferred by the Husband to his sister, at 102 Nareen Parade, Narrabeen North. The Husband's sister was a party as second respondent to the Family Court proceeding. 

I will not recount the detail of the orders made by his Honour. It suffices for present purposes to say that they included orders directed to a sale of both properties and a division of the net proceeds of sale, 75 per cent to the Wife and 25 per cent to the Husband. 

In his Reasons for Judgment, Chisholm J made certain comments  relating to the credit of the witnesses, and preferring the evidence of the Wife to that of the Husband. On 19 December 1997, Mr Gibson applied to Chisholm J for leave to reopen and that leave was refused on 22 December.

The Family Court clearly proceeded on the assumption, not having been informed of Mr Gibson’s bankruptcy, that the property, the subject of its orders, was able to be affected by them, and in ignorance of the vesting of the Husband’s property in the Official Trustee under the Act.

The solicitor for the Wife became aware on 12 January 1998 of the bankruptcy. The evidence shows that on 13 January she made an inquiry of the solicitor who had appeared for the Husband in the Family Court proceeding, and was informed that he also had only just found out about the bankruptcy.

In due course, the question why Mr Gibson did not reveal the fact of his bankruptcy will, no doubt, have to be explored.

REASONING
The present application seeks to invoke an exercise of a discretion.  In Re Sharpe (unreported, NG 896/96, 17 October 1996) I addressed some of the issues which can arise on an application under s 35A of the Act. Those issues were also considered by Sackville J in Re Morris (unreported, NB 2183/96 10 September 1996) and by Whitlam J in Re Maas (unreported, NG 625/97, 17 July 1997).  However, as I noted in Re Sharpe, on questions of discretion no two cases are identical.

Mr Johnson, counsel for Mrs Gibson, submits that his client’s proceeding should be transferred to the Family Court for three main reasons.  The first is that the orders which were made by the Family Court on 22 December may need to be varied in the light of the decision taken on the application for annulment.  Those orders, being orders of the Family Court, can not be varied by this Court. In the light of this, there is some advantage, in terms of convenience and cost, if the Family Court also hears and determines the application for annulment.

The second factor to which Mr Johnson points is that a question of abuse of process of the Family Court may arise.  As I implied earlier, the reason why Mr Gibson did not inform any relevant person of his bankruptcy is a matter which I have not been called upon to consider. If there has been an abuse of the process of the Family Court, that Court alone will have occasion to consider and deal with that matter. Again, a transfer of the present proceeding to that Court would result in some benefit in terms of convenience and cost.

A third factor referred to by Mr Johnson is a direct saving in costs.  The financial and property aspects of the relationship between the Husband and the Wife have already been the subject of extensive evidence and consideration in the Family Court.  No doubt there are documents physically there, and, as well, that Court would hold the transcript of the hearing before Chisholm J.  It is true that much of this material could be duplicated before this Court if the application for annulment were to be heard here.  It is also true that the suggested advantage can be overstated.  After all, the application for annulment is a distinct proceeding from the Family Court proceeding, whether it is heard and determined in this Court or in the Family Court. However, there does remain some direct saving in costs. 

I emphasise that I approach the present question without any assumption that Chisholm J will or will not be the judge to hear the application for annulment.  In the event that he should hear it, there is an added advantage in a transfer to the Family Court in the form of his Honour's familiarity with the background facts.  But there may be reasons why his Honour would not hear the application.  All of the advantages to which I have referred above do not depend on his doing so.

In opposition to the application for transfer, Mr Gibson submits that the Family Court proceeding is concluded but for an argument as to costs. But the application for annulment is itself a separate proceeding, and the advantages to which I have referred are not negated by the fact that only a question of costs remains to be dealt with in the Family Court proceeding. 

Mr Gibson also points out, correctly, that the Federal Court is the court specially invested with jurisdiction in bankruptcy.  I dealt with a similar submission in Re Sharpe, referred to earlier.  Although entitled to some weight, I do not think that this consideration should carry the day, for the reasons which I attempted to state in my Reasons for Judgment in that case. 

Mr Gibson also submits that much of the evidence relating to financial and property matters in the Family Court proceeding was, to use his word, “deficient”. He submits that in a bankruptcy proceeding, more precise evidence is called for than in a Family Court proceeding. I make no comment as to that general proposition: what is important for present purposes is that the application for annulment, whether dealt with in this Court or in the Family Court, will always be a bankruptcy proceeding distinct from the Family Court proceeding, and will be dealt with in accordance with the Act and subordinate legislation, whether by the Family Court or by this Court (see s 35A(3) (f) of the Act, set out earlier).

CONCLUSION AND ORDERS
All things considered for the reasons mentioned earlier, I think that the present proceeding should be transferred to the Family Court of Australia.

The orders of the Court are:  first, an order that proceeding NG 7040 of 1998 be transferred to the Family Court of Australia; secondly, an order that the parties’ costs of the application to date be their respective costs of the proceeding (NG 7040 of 1998). 

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren

Associate:

Dated:  4 March 1998

Counsel for the Applicant:	Mr J T Johnson
Solicitor for the Applicant:	Ms Knox of Marks Griffiths Hazzard & Bova
The First Respondent appeared in person.
Solicitor for the Second Respondent:	Ms Nash of Sally Nash & Co
Date of Hearing:	16, 20 January 1998
Date of Judgment:	20 January 1998