Jandric v Jandric [No 2]

[2007] WASC 273

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   JANDRIC -v- JANDRIC [No 2] [2007] WASC 273

CORAM:   EM HEENAN J

HEARD:   24 OCTOBER 2007

DELIVERED          :   24 OCTOBER 2007

PUBLISHED           :  16 NOVEMBER 2007

FILE NO/S:   CIV 1797 of 1998

BETWEEN:   GOJKO JANDRIC

Plaintiff

AND

ELENA JANDRIC
First Defendant

REGISTRAR OF TITLES
Second Defendant

Catchwords:

Injunction - Interlocutory injunction - Discharge - Injunction gone stale after eight years - Interlocutory injunction to prevent sale of land pending trial of claimant's action alleging constructive trust - Action commenced but lapsed following springing order - Applicant became bankrupt - Trustee took no action to revive claim or institute fresh claim - Applicant discharged from bankruptcy - Defendant land owner applied for discharge of injunction - Applicant commenced fresh action but abandoned this because right remained in trustee in bankruptcy - Notice to trustee in bankruptcy to bring or abandon action - Section 60 of the Bankruptcy Act 1966 (Cth) - Trustee assigned right of action to claimant - Claimant commenced fourth action after application by land owner to dissolve injunction - Injunction discharged

Legislation:

Bankruptcy Act 1966 (Cth)

Result:

Interlocutory injunction discharged

Category:    B

Representation:

Counsel:

Plaintiff:     Mr T Galic

First Defendant              :     Mr F Sammut

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Galic & Co

First Defendant              :     F Sammut & Co

Second Defendant         :     No appearance

Case(s) referred to in judgment(s):

Abeyratne v Trkulja (1998) 90 FCR 253

Aware Industries Ltd v Robinson (1997) 75 FCR 600

Blennerhassett v Scanlon (1826) 1 Hog 363

Coyne v Commercial Equity Corporation Ltd (1998) 20 WAR 109

Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124

FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268

Green v Pulsford (1839) 2 Beav 70; (1839) 48 ER 1105

Jandric v Jandric [1999] WASC 22

Official Receiver in Bankruptcy v Schutlz (1990) 170 CLR 306

Re Bankrupt Estate of Cirillo (1996) 65 FCR 576

Re Carter [2000] FCA 1549

Willis v Yates (1834) Coop Temp Brough 498; (1834) 47 ER 177

1. EM HEENAN J:  The plaintiff in this action, Mr Gojko Jandric, became bankrupt in 2002.  Before then he had commenced two actions against the first defendant, Mrs Elena Jandric.  The first (CIV 1797 of 1998) was an application for injunctive relief restraining the first defendant from dealing with particular land.  An order granting such relief was made by Commissioner Buss on 18 May 1999.  The second action (CIV 1571 of 1999) was commenced by writ of summons, filed on 25 May 1999, pursuant to the conditions upon which the injunction was granted by Commissioner Buss.  In this the plaintiff asserted the existence of a constructive trust in his favour arising from alleged contributions made by him, in money and in kind, to the acquisition and construction of land and a home at Rockingham registered in the name of the first defendant.  It had as its objective the vindication of the plaintiff's alleged equitable interest in the subject land - namely, the asserted interest being protected by the injunction.

2. Due to the plaintiff's failure to file and serve a statement of claim in the second action, a springing order was made, on 23 June 2000, for the dismissal of that action.  The springing order was not complied with but there was no step taken, nor order sought, for the dismissal of the action.  The parties have not, on the present application, attempted to establish exactly what the fate of the second action was.  The possibilities are that it has simply been terminated because of non‑compliance with the springing order notwithstanding the absence of any formal order for judgment dismissing the claim, or that the second action might still be on foot.

3. The conclusion to be drawn from this, which Mrs Jandric's counsel urges, is that the second action thereupon lapsed - it seems to me that that is the correct conclusion to adopt:  FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268. No attempt was then made by Mr Jandric to revive that action or, until very recently, to commence another action to vindicate his claim to the existence of a constructive trust over the Rockingham property. This does not mean that action CIV 1571 of 1999 disappeared without trace or lost all potential significance. Assuming that the effect of non‑compliance with the springing order had resulted in the action lapsing, or being struck out, there still remained the opportunity for Mr Jandric to apply for an extension of time to comply with the springing order and reinstate the action if he could show that the interests of justice required such a course: FAI General Insurance Co Ltd v Southern Cross Exploration NL.

4. This present application is to discharge the interlocutory injunction granted by Commissioner Buss on 18 May 1999.  The interlocutory injunction was not granted in the action which lapsed because of non‑compliance with the springing order (CIV 1571 of 1999) but, rather, in this first action (CIV 1797 of 1998).  It was granted on conditions - namely, the prompt institution of the second action - in order to preserve the subject matter pending the determination of the claim in the second action or until further order.  With the termination of the second action the reason for the interlocutory injunction disappeared.  It seems to me, therefore, that if an application had then been made in the first action, the present proceedings, to dissolve the injunction, that result would have been extremely probable.  That is not to say that Mr Jandric could not still have applied afresh for a further injunction, pending the re‑institution of his claim for relief had he sought to do so, but that was never attempted.

5. There are many circumstances in which a party restrained or affected by an injunction may apply to the court for it to be dissolved.  It is unnecessary to examine or review the many authorities dealing with occasions when injunctions may be dissolved but, except in the case of interim injunctions which last only to a specified date and which then cease to have effect unless extended, an interlocutory injunction will generally endure until trial or other order and its continuity will be presumed until then.  On the other hand, if an action is dismissed an interlocutory injunction will be discharged automatically without any order for dissolution being necessary:  Blennerhassett v Scanlon (1826) 1 Hog 363; Willis v Yates (1834) Coop Temp Brough 498; (1834) 47 ER 177; Green v Pulsford (1839) 2 Beav 70; (1839) 48 ER 1105.

6. As a result, this injunction continued, albeit in an extremely precarious and fragile state, from the point at which the second action (CIV 1571 of 1999) lapsed.

7. The next step in this long and sorry saga is that, on 21 October 2002, Mr Jandric became bankrupt.  It follows from his bankruptcy, that all his property vested in his trustee in bankruptcy, including any choses in action, estates, interests or other claims which he had by way of a constructive trust or otherwise in the property registered in the legal ownership of Mrs Jandric:  Bankruptcy Act 1966 (Cth), s 58, s 160. One of the items of property which therefore vested in the trustee in bankruptcy was the right, such as it was, for Mr Jandric to apply to the court, belatedly, for an extension of time to comply with the springing order in the second action (CIV 1571 of 1999) so as to be able to pursue that claim for relief arising from the alleged constructive trust.

8. No attempts were made by the trustee in bankruptcy to pursue or vindicate the claim which had been advanced by Mr Jandric prior to the bankruptcy in respect of this property.  Further, no attempt was made to dispose of the original action (CIV 1735 of 1998) in which the injunction had been granted.  That, and all other actions, had, of course, been stayed by the fact of the bankruptcy.

9. Relevantly, s 60(2) of the Bankruptcy Act 1966 (Cth) provides that:

   An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.

   This provision applies only to actions or proceedings commenced prior to the bankruptcy:  Coyne v Commercial Equity Corporation Ltd (1998) 20 WAR 109. However, upon bankruptcy, all of the bankrupt's choses in action (subject to s 60(4), which is not relevant in the present case) pass to the trustee in bankruptcy: Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124, 130 ‑ 131 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ).

10. Many years passed without any further action being taken.  In the second half of last year Mrs Jandric, through her solicitors, initiated steps to have the injunction discharged.  That resulted in the original action being listed for mention, so that advantage could be taken of the liberty to apply reserved by Commissioner Buss to discharge or vary the injunction.  That application then came before registrars for attention and management and it prompted the commencement by Mr Jandric (by then discharged from his bankruptcy) of a third action (CIV 1735 of 2007) to advance and vindicate his claim for the benefit of the alleged constructive trust.

11. As that third action was programmed for hearing it was belatedly recognised by Mr Jandric that the property of the bankrupt, including the ownership of this right of action, remained with the trustee and that it had not been revested in Mr Jandric by reason of his discharge.  That is, of course, the well‑accepted and orthodox position:  Official Receiver in Bankruptcy v Schutlz (1990) 170 CLR 306. That meant that Mr Jandric had no right, title or interest in any of the claims sought to be advanced by the third action (CIV 1735 of 2007). Upon that being appreciated his solicitors discontinued the third action.

12. Shortly afterwards, the solicitors for Mrs Jandric gave notice to the trustee in bankruptcy under s 60(3) of the Bankruptcy Act requiring the trustee to elect unconditionally to continue the original action (CIV 1735 of 1998) within a 28‑day period or any extended period, failing which the proceedings would be deemed to have been abandoned.

13. In this regard, s 60(3) of the Bankruptcy Act provides that:

    If the trustee does not make such an election within 28 days after notice of the action as served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.

    However, a trustee cannot be taken to have abandoned an action pursuant to s 60(3), even if the trustee were aware of the existence of the action, unless adequate notice of the action has been served upon him: Re Carter [2000] FCA 1549 [14] (Cooper J) and Aware Industries Ltd v Robinson (1997) 75 FCR 600, 602 (Northrop, Davies and Sundberg JJ).

14. The trustee was, at that stage, not disposed to continue the proceedings so approaches were made to the trustee by Mr Jandric to assign all rights to the action to Mr Jandric in order to permit him to pursue the claim. This necessitated an extension of the time limit prescribed by s 60(3) of the Bankruptcy Act. An application for such an extension was made to the Federal Magistrates Court and an order granted, on 26 September 2007 by Federal Magistrate Lucev, extending the period within which an election might be made by the trustee under s 60(3) of the Bankruptcy Act in respect of the original proceedings commenced by Mr Jandric in this court (CIV 1797 of 1998) until 4.00 pm on 10 October 2007.

15. It is, however, common ground between the parties that there was no election made by the trustee to continue those proceedings.  What happened instead was that, by a deed of assignment dated 10 October 2007, the trustee assigned to Mr Jandric the benefit of all claims in respect of this alleged constructive trust, and assigned the benefit of all or any causes of action giving rise to rights of action against Mrs Jandric in relation to the property which was the subject of these proceedings, or of any future proceedings which might be instituted by the assignee against Mrs Jandric in respect of that land.  Also the subject of the deed of assignment were all or any other causes of action claiming rights against Mrs Jandric in connection with the land in which the assignee claims to have a beneficial proprietary interest and all or any other claims whatsoever, including monetary claims, against Mrs Jandric arising out of, or in connection with, the land and the extent of all or any beneficial proprietary interest in the land which had previously been vested in the trustee.

16. There are a number of major difficulties in construing this deed of assignment and determining the effect of the failure to make an election by the trustee under s 60(3) of the Bankruptcy Act, following upon the notice given by Mrs Jandric.  The first is that the deed of assignment seems to assume that it is the present action (CIV 1797 of 1998) which contains and makes the claim by Mr Jandric to a beneficial interest in the land.  That is an erroneous assumption, because all this originating summons did was to seek an injunction, or an extension of a caveat, to protect the claim which Mr Jandric was asserting to the land.  It was, at all times, treated as essential for Mr Jandric to bring a separate action asserting his alleged beneficial interest by way of constructive trust in the subject property to secure or to establish that claim.  This present action is nothing but a preliminary foray to obtain a shield to protect the existence of that claim if and when it were later to be made and pursued.

17. The true action making the claim was the second action (CIV 1571 of 1999) but, as I have already described, that lapsed long before the bankruptcy and was not a pending proceeding in existence at the date of the bankruptcy.  When I say it was not a proceeding which then existed, the action by the date of bankruptcy did not exist although the underlying claim probably survived.

18. There have been no submissions made in the present case on the question of whether or not the process of notifying a trustee in bankruptcy of the existence of a pending action and requiring him or her to elect to proceed or to discontinue the action within the limited period, pursuant to s 60(2) and s 60(3) of the Bankruptcy Act, applies after the bankrupt has been discharged from the bankruptcy.  However, as the chose in action representing the bankrupt's interest in the pending litigation remains vested in the trustee, even after discharge (in the absence of specific assignment to the former bankrupt or others), it follows that this is the case.  Indeed, that certainly appears to be the assumption underlying the application to the Federal Magistrates Court for the extension of the period to comply with the notice in the present case.  Even then, however, the trustee did not elect to proceed with the action but, rather, assigned the chose in action to Mr Jandric, thus, effectively, removing from himself, not only the responsibility of making an election one way or the other, but, also, the power to determine what, if anything, should become of the action which had been assigned to the former bankrupt.

19. Without the benefit of detailed argument and submissions on the point, I am hesitant to formulate a concluded view as to the position which has resulted from these steps. I shall, however, assume that the assignment of the cause of action to Mr Jandric has removed control of the cause of action from the trustee and taken it outside the application of s 60(3) of the Bankruptcy Act.  From that point on, the cause of action reposed in Mr Jandric, now sui juris.

20. In those circumstances, it was open for the first defendant in the action, Mrs Jandric, to apply to the court for the dismissal of the action for want of prosecution or for other relief such as the discharge of this old injunction.  As she has done so, the application can be dealt with on the merits without involving the trustee in bankruptcy and on the basis that the previous automatic stay of proceedings effected by the bankruptcy has been terminated.  This seems to me to accord with principle and with the interests which the Bankruptcy Act is designed to advance and protect.  Although this is not a suitable occasion upon which to reach a concluded view, it would appear to have support from the decisions in Re Bankrupt Estate of Cirillo (1996) 65 FCR 576 and Abeyratne v Trkulja (1998) 90 FCR 253, which confirm that a trustee can assign to the bankrupt a cause of action arising before bankruptcy and vested in the trustee during the bankruptcy, provided the assignment takes place after discharge from bankruptcy - because the property vesting in the bankrupt after discharge is not divisible among creditors: Bankruptcy Act, s 116(1)(a). See, generally, McDonald Henry & Meek's Australian Bankruptcy Law and Practice, vol 2 (at December 2001) [60.4.15].

21. The assumption which I have described is one which is favourable to the plaintiff but, nevertheless, one which is adequate to allow this present application to be determined.  It is, for that reason, adopted.

22. Importantly, despite the assignment to Mr Jandric of the cause of action the subject of CIV 1797 of 1998, he has taken no further step in this action, except to oppose the present application by Mrs Jandric to discharge this stale injunction.  He has, however, recently commenced a fourth action (CIV 2062 of 2007) designed to advance his claim of a constructive trust.  In effect, his opposition to the discharge of the injunction is because of his desire to take the benefit of its protective effect to allow him to pursue this latest fourth action.  I proceed, therefore, on the basis that Mr Jandric has, by the fourth action, demonstrated an intention to proceed with his claim.

23. The question is whether the injunction should be permitted to continue in these circumstances.  There can be no doubt that this injunction is very stale.  The express condition upon which it was granted, and I repeat it in the words of Commissioner Buss, that 'the plaintiff commence promptly proceedings in this [c]ourt by writ of summons for the purpose of determining the serious question to be tried, which I have found exists' (Jandric v Jandric [1999] WASC 22 [49]), has only in part been performed. A clear premise of this condition was that the action, once commenced, would be diligently prosecuted. It was not and it has lapsed. The very purpose of granting that injunction has therefore disappeared. However, the situation which remains is that while the action seeking to vindicate the claim (CIV 1571 of 1999) has lapsed and disappeared, it does not follow that the underlying claim has disappeared.

24. There are submissions made by counsel for the first defendant that the third action, and certainly the fourth, amount to an abuse of process and that the latter should not be permitted to continue.  But no formal application has been made to stay, or to dismiss, the fourth action on that ground and there is no application in the fourth action before me.

25. The question of whether or not Mr Jandric should have the benefit of an interlocutory injunction to restrain any kind of dealings with the subject land now in October 2007 seems to me to be a very different question to whether or not he was entitled, as he was, to the grant of an injunction to protect his claim on conditions in May of 1999.  The passage of the intervening eight and a half years simply cannot be overlooked.  It is enough to notice from Commissioner Buss's reasons for decision that the facts which Mr Jandric alleges for the claim for the existence of the asserted constructive trust are, in almost every material respect, denied by Mrs Jandric.  In his reasons for decision Commissioner Buss set out the position of Mrs Jandric as it appeared from affidavits which she had filed in the proceedings back in 1998.

1. At [21] of those reasons, Commissioner Buss recited that Mrs Jandric maintains that Mr Jandric and herself were married in 1974, separated in 1980 and divorced in 1983.  She said that since 1983 they had been friends only and she denied that there was any de facto relationship between 1984 and 1993.

2. Further, Mrs Jandric swore that she had a property in Melbourne which she sold in 1988.  After discharging a mortgage over the property she received the net sale proceeds of $34,236 and shortly afterwards left Melbourne and came to Western Australia.  In 1989 she purchased the subject land for about $21,500 from the net sale proceeds of the Melbourne property.  She then says that she constructed the house on the land with $20,000 which she borrowed from the Town & Country Building Society and the balance of the net proceeds of the sale of the Melbourne property.

3. She also said that during the construction of the home Mr Jandric offered to assist in its construction as a labourer.  At the time he was unemployed and she permitted him to assist the builders as they thought fit.  According to her, his labouring contribution was very little and he was simply there as an observer from time to time.  Mrs Jandric said that Mr Jandric did not assist in any way by contributing sums of money for the construction of the home as he has claimed.

4. She said that the only financial contribution made by Mr Jandric towards the construction or furnishing of the home was to assist her in making repayments under an agreement by which she had borrowed $5,000 to pay for some furnishings.  She further says that between 1993 and 1995 the parties did agree to live together on a de facto basis.  She also says that in 1994 she received $20,000 in damages as a result of a motor vehicle insurance claim and that she used that amount to discharge the mortgage over the land.  She went on in other affidavits to deny that Mr Jandric ever contributed any money towards the acquisition of the Rockingham land or for the construction of the house and improvements as claimed.

5. It follows, therefore, that the underlying factual basis for the alleged claim to a beneficial interest in the land is strongly contested.  It depends upon the ability of the plaintiff, Mr Jandric, to establish that all these disputed payments, apparently said to have been made in 1988 or 1989, were in fact made.

6. The passage of the intervening eight and a half years would seem to me to render the task of proving that - already a difficult task in 1999 some 10 or 11 years after the events in question - even more difficult and the prospects of success more tenuous.  Furthermore, the lapse of that time may well have given rise to the existence of potential defences, whether by way of laches in relation to equitable claims or perhaps change‑of‑position defences.

7. It seems to me that, having regard to all these factors, there is simply no basis to allow the present injunction to stand.

8. This means that Mr Jandric still has pending his fourth action (CIV 2062 of 2007) in which he seeks to advance this claim.  There has been no application before me to dismiss or to stay that action for want of prosecution, prejudice, delay, abuse of process or on any other ground.  If the action remains on foot, it may provide a vehicle by which Mr Jandric can apply for a new injunction or some other form of protective relief in respect of this claim for an interest in this land. 

9. It seems that it is far preferable to leave Mr Jandric with the potential opportunity of doing that, with any strengths or weaknesses that it may entail, so that any claim to an injunction can be considered in the light of the circumstances which exist today rather than to give him the benefit of an injunction granted in 1999 for purposes which he has so conspicuously neglected.  The result, therefore, is that this injunction will be discharged.