Ifx Markets Limited v Rappaport - [2009] FMCA 893

FEDERAL MAGISTRATES COURT OF AUSTRALIA

IFX MARKETS LIMITED v RAPPAPORT & ANOR

[2009] FMCA 893

BANKRUPTCY – Application to set aside a Personal Insolvency Agreement (PIA) – whether the PIA fails to comply with Part X of the Bankruptcy Act 1966 (Cth) and is unreasonable considered.

Bankruptcy Act 1966 (Cth), ss.64ZA, 77, 196, 222, 231
Bankruptcy Regulations 1996
Corporations Act 2001 (Cth), s.206

For the Good Times Pty Ltd v Boyle & Anor [2009] FMCA 512
Re Andrew Nicholas Emmett; ex parte Financial Finance Corporation Ltd [1991] FCA 632

Applicant:

IFX MARKETS LIMITED

First Respondent:

MICHAEL DANIEL RAPPAPORT

Second Respondent:

MICHAEL GREGORY JONES

File Number:

SYG 1049 of 2009

Judgment of:

Driver FM

Hearing date:

10 September 2009

Delivered at:

Sydney

Delivered on:

29 October 2009

REPRESENTATION

Counsel for the Applicant:

Mr L Byrne

Solicitors for the Applicant:

Heidtman & Co Lawyers

Counsel for the first Respondent:

Mr P Dunn, QC

Solicitors for the first Respondent:

Lander & Rogers

Counsel for the second Respondent:

Mr E Finnane

Solicitors for the second Respondent:

Uther, Webster & Evans

ORDERS

The application is dismissed.
The Court notes that in the light of the dismissal of the application, the first respondent seeks costs on an indemnity basis and the second respondent seeks costs on a party and party basis.
The applicant is to file and serve on the respondents any affidavit evidence it wishes to rely upon in relation to costs no later than

12 November 2009.
The respondents are to file and serve on the applicant any affidavit evidence in reply in relation to costs no later than 19 November 2009.
The respondents are to file and serve on the applicant submissions in relation to costs not less than 14 days before the hearing date.
The applicant is to file and serve on the respondent submissions in relation to costs not less than 7 days before the hearing date.
The matter be listed in relation to the outstanding costs applications at 10.15am on 8 December 2009.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1049 of 2009

IFX MARKETS LIMITED

Applicant

And

MICHAEL DANIEL RAPPAPORT

First Respondent

MICHAEL GREGORY JONES

Second Respondent

REASONS FOR JUDGMENT

Introduction and background

The applicant, IFX Markets Limited (“IFX”) seeks in these proceedings orders pursuant to s.222 of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) setting aside a Personal Insolvency Agreement (“PIA”) in respect of Michael Daniel Rappaport, the first respondent. The second respondent is the administering trustee under the PIA. IFX also seeks costs. The applicant contends that the PIA is not in the best interests of the creditor because:
a)payment of only 1.3 cents in the dollar;
b)it has incurred legal costs; and
c)bankruptcy is a better option for creditors.
The following statement of background facts is derived from written submissions filed on behalf of the parties.
The first respondent (Mr Rappaport) was born on 8 October 1979.
Mr Rappaport (with a different name) entered into a PIA on 9 July 2007 that was…

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.

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Details

Case: [2009] FMCA 893
Decision Date: 29 October 2009

CaseChat Overview and Summary

Ifx Markets Limited, the applicant, brought proceedings against Mr Rappaport, the first respondent, and Mr and Mrs Swerissen, the second and third respondents, in the Federal Court of Australia. The primary dispute involves an investment made by the Swerissens in Ifx Markets, which resulted in significant financial losses. The applicant sought to have the Swerissens' investment contract declared void, and to have Mr Rappaport, an associate of Ifx Markets, personally liable for the losses incurred.

The central legal issues before the court included the validity of the investment contract, the extent of Mr Rappaport's personal liability, and the appropriate allocation of costs between the parties. The court had to determine whether the contract was void and, if so, whether Mr Rappaport could be held personally liable. Additionally, the court needed to address the respondents' contentions regarding the costs of the proceedings, particularly in light of the dismissal of the application.

In dismissing the application, the court concluded that the investment contract was not void and that Mr Rappaport was not personally liable. The court found that the respondents' argument regarding the costs was well-founded, given the dismissal of the application. Consequently, the court ordered that Ifx Markets was to bear the costs of the proceedings, with specific timelines provided for the exchange of affidavit evidence and submissions relating to the costs. The matter was scheduled for a further hearing to address the outstanding costs applications.

The court's decision effectively dismissed Ifx Markets' claims against the respondents. The first respondent sought costs on an indemnity basis, while the second respondent sought costs on a party and party basis. The court set forth detailed procedural directions for the exchange of affidavit evidence and submissions, ensuring a clear timeline for the resolution of the costs issue. The matter was subsequently listed for a hearing to address the outstanding costs applications.

Orders

Orders of the court

The application is dismissed.

The Court notes that in the light of the dismissal of the application, the first respondent seeks costs on an indemnity basis and the second respondent seeks costs on a party and party basis.

The applicant is to file and serve on the respondents any affidavit evidence it wishes to rely upon in relation to costs no later than

12 November 2009.

The respondents are to file and serve on the applicant any affidavit evidence in reply in relation to costs no later than 19 November 2009.

The respondents are to file and serve on the applicant submissions in relation to costs not less than 14 days before the hearing date.

The applicant is to file and serve on the respondent submissions in relation to costs not less than 7 days before the hearing date.

The matter be listed in relation to the outstanding costs applications at 10.15am on 8 December 2009.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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